MNI BRIEF: Trade Fragmentation Could Cut Global GDP 9%-Lagarde

MNI (LONDON) - Increased fragmentation of world trade as a result of the U.S. elections could cut global GDP by 9% in an extreme scenario, European Central Bank President Christine Lagarde said in an interview with Le Monde published on Thursday.

 Lagarde said she did not want to give an opinion on the candidates in the election but noted that U.S. international trade policy will have an impact on economic activity in the rest of the world, and primarily on China.

“Whoever wins, if trade fragmentation worsens, the effect on global GDP will be negative, with losses reaching 9% in a severe scenario of full decoupling according to ECB simulations,” Lagarde said. “But remember: when Joe Biden was elected, everyone thought that he would remove the customs barriers erected by his predecessor (Donald Trump). Nothing came of that.”