Impact of Geopolitical Conflicts on the Global Economy

LONDON (Reuters) – The global economy could face losses of $14.5 trillion over a five-year period from a hypothetical geopolitical conflict that disrupts supply chains, according to insurance market Lloyd's of London.

Lloyd's stated that the economic impact would arise from severe damage to infrastructure in the conflict region and the potential compromise of shipping lanes.

Conflicts in Ukraine and Gaza have already disrupted shipping routes in the Black Sea and Red Sea.

> "With more than 80% of the world's imports and exports – around 11 billion tons of goods – at sea at any given time, the closure of major trade routes due to a geopolitical conflict is one of the greatest threats to the resources needed for a resilient economy," Lloyd's said.

The potential for such a geopolitical conflict is categorized as a systemic risk – low likelihood but high impact.

Lloyd's has also researched other systemic risks in collaboration with the Cambridge Centre for Risk Studies, including cyberattacks and extreme weather events.