IMF chief urges world to avoid a 'second Cold War'

Countries must do more to avert the costly consequences of growing global trade fragmentation and help avert a 'second Cold War,' the International Monetary Fund's managing director said.

'I am among those who know what are the consequences of a Cold War: it is loss of talent and contribution to the world,' Kristalina Georgieva said during a press conference at the official start of the World Bank and IMF's spring meetings.

'I don't want to see that repeating,' she said, adding that the world should 'rationally accept there will be some cost, there will be some fragmentation, but keep these costs low.'

Multilateral institutions like the World Bank and IMF have an important role to play in preventing the world from splintering into different blocs with severe economic consequences, she said.

An IMF report earlier this week predicted that growing trade fragmentation resulting from events like Brexit, the US-China trade war and the Russian invasion of Ukraine could make the global economy as much as seven percent smaller than it otherwise would have been.

Policymakers had a crucial role to play to 'defend the interests' of their citizens, Georgieva said.

'If we fail to be more rational, then people everywhere will be worse off,' she said.