The International Monetary Fund released a new report Wednesday about the impact of declining relations between Washington and Beijing. The IMF says that may have an outsized impact on another part of the world.
When it comes to global investment, geopolitical tension is a friend to no one.
But the IMF says friction between Washington and Beijing will likely hurt China and its closest trading partners more than the United States and its main trade relationships.
The report found the investment impact of continued strained relations between the U.S. and China.
Researchers said those tensions are tending to fragment investment capital into extremes —concentrating the money among “countries that share similar geopolitical views.”
The IMF said the longer that split continues, the more it will hurt the global economy.
It said Southeast Asia will suffer more than most other parts of the world because of its increased reliance on external investment and trade with China.
Emerging markets are more likely to suffer than established economies, while foreign investment in research and development is likely to decline.
While the entire picture remains difficult to predict and subject to change, the IMF said a further split into divisions will have a worldwide impact, concluding that quote, “a fragmented global economy is likely to be a poorer one.”
