The world will split into two major blocs - US-EU and Russia-China

IMF: The world will be divided into US-EU and Russia-China blocs

Experts at the International Monetary Fund believe that the world may split into two trading blocs. One will include the United States and the European Union, and the other one — Russia and China.

In their opinion, the emergence of such blocs is associated not only with the Ukrainian crisis, but also with restrictions in commodity and semiconductor sectors, which are key to strategic competition. In addition, the US and China have introduced a number of bilateral trade barriers.

All these events may harbinger broader geo-economic fragmentation — a political reversal of economic integration, with international trade being the central component of it, RIA Novosti said.

Limited access to export markets will affect prices of many goods, IMF also said.

The Russia-China bloc may lack certain metals (for example, lead), whereas the US-EU bloc will see a surge in prices on molybdenum, tin and titanium.

The "Eastern” bloc may face a shortage of cobalt, nickel, copper, palm oil, soy, printed circuit boards and various types of modern-generation microcircuits, since their production is located in several countries of the "Western” bloc.

However, experts from the IMF do not predict any consequences of such a scenario, since it is necessary to take into account the influence of other regions, such as, for example, Africa and Central Asia.

The proposed model is only a theory as trade turnover between the blocks will still continue, even in the absence of direct logistics routes.

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Author`s name Petr Ermilin
Editor Dmitry Sudakov