Finance
Global trade fragmentation comes with big output losses, ECB warns
Published by Global Banking & Finance Review®
Posted on January 3, 2025
1 min readLast updated: January 27, 2026
Global Banking & Finance Review®
Company
Published by Global Banking & Finance Review®
Posted on January 3, 2025
1 min readLast updated: January 27, 2026
ECB warns that global trade fragmentation due to protectionism leads to significant output losses and increased economic volatility.
FRANKFURT (Reuters) - Global trade fragmentation due to protectionist measures entails sizeable output losses for all countries involved, European Central Bank chief economist Philip Lane said on Friday, just as the incoming U.S. administration considers imposing fresh tariffs.
"Avoid broad-based protectionism because while resilience is a legitimate concern, a tit-for-tat trade war is welfare reducing and does not fully eliminate interdependencies," Lane said in presentation slides for a speech.
Trade fragmentation will matter for central banks and monetary policy because it causes larger, more frequent supply shocks during the transition period while over the longer run, reduced trade diversification increases volatility and inflation, he said.
(Reporting by Balazs Koranyi; Editing by Hugh Lawson)
The main topic is the impact of global trade fragmentation on economic output and stability.
The ECB warns that protectionism leads to output losses and increased volatility, affecting economic stability.
Trade fragmentation causes supply shocks and increases inflation, impacting central banks' monetary policies.
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