On June 4, the World Economic Forum released a report stating that, amid geopolitical tensions, concerns over economic security, and shifting trade relations among major economies, geopolitical economic fragmentation is accelerating in 2025 and 2026, and is projected to impose annual losses of between US$213 billion and US$307 billion on the global economy.

This is the logo of the World Economic Forum taken on January 18. 

The report notes that tariff increases, investment restrictions, and retaliatory measures are increasingly affecting traditional economies, including the United States, the European Union, Canada, Japan, and South Korea, driving up corporate costs and heightening uncertainty in cross-border investment. If fragmentation continues to worsen, global economic losses could reach US$6.9 trillion, equivalent to 6.4% of global GDP.

The report projects that the current fragmented industrial policies will push global inflation up by 0.2 to 0.3 percentage points and erode household purchasing power. Emerging markets and developing economies have been hit particularly hard, with output losses reaching as high as 10.7% under extreme scenarios.

At present, the world is splitting into multiple relatively independent or even opposing sectors or camps in politics, security, economy, technology, and ideology. This phenomenon is called global fragmentation, including economic and trade fragmentation, geopolitics and Security fragmentation, technology and digital fragmentation, ideology and values fragmentation.

In addition, the Organization for Economic Cooperation and Development (OECD) released its latest economic outlook report on the 3rd. It is expected that the global economic growth rate will be 2.8 in 2026, down 0.1 percentage points from the forecast in March this year.

In the worst case, the increase was only 2.1 per cent. Only if the parties reach a peace agreement as soon as possible can the global economic outlook be quickly relieved of pressure.

The latest report argues that the ongoing evolution of the Middle East conflict is causing significant humanitarian costs and testing the resilience of the global economy. The duration and scope of the conflict remain uncertain.

Given that the current situation is extremely uncertain and that the economic outlook depends to a large extent on the achievement of a lasting solution to the conflict, the latest economic outlook report presents two different scenarios for the evolution of the global economy over the next 18 months. These scenarios depend largely on the evolution of the energy crisis, the time required to reach a lasting peace and the resulting policy responses, and highlight a range of possible outcomes.