Gita Gopinath traveled to Stanford on May 7 to do what policy leaders often do: meet with students and faculty and offer their perspective on the world today. For the first deputy managing director of the International Monetary Fund (IMF), the impact from shifts in geopolitics was the topic du jour.
Speaking at an event hosted by the Stanford Institute for Economic Policy Research (SIEPR) in collaboration with the Stanford King Center on Global Development and the Hoover Institution, Gopinath talked about the outlook for the global economy and the U.S. dollar as trade among the world’s largest countries splinters along political lines. The good news, she said, is the level of risks facing the world economy today is lower than it has been “in a very long time.” The bad news? Trade among “geopolitically distant” countries is declining at rates, she said, not seen since the start of the Cold War more than 75 years ago. Trade fragmentation and protectionist economic policies, she said, could be dangerous. “A very serious decoupling scenario could cost up to 7 percent of [global] GDP,” Gopinath said in calling on countries to, among other steps, strengthen the World Trade Organization, keep open lines of communication, and focus on common interests like climate change.