Geopolitical Conflicts Could Cost Global Economy $14.5 Trillion in Five Years

Geopolitical conflicts are projected to cost the global economy a staggering $14.5 trillion over the next five years, according to a report from Lloyd's of London. The insurance market regulator highlighted that disruptions in supply chains and significant impacts on the insurance sector are major contributors to this predicted loss. With over 80% of the world’s imports and exports transported by sea, the closure of key trade routes poses a severe threat to global economic resilience. The report outlines that the economic fallout primarily stems from infrastructure damage in conflict zones, the reorganization of global trade networks due to sanctions, and the challenges posed by damaged shipping lines. Notably, Europe could face losses of up to $3.4 trillion due to its reliance on imports for critical components such as semiconductors used in manufacturing. The current escalation of geopolitical tensions, particularly following Israel's military actions in the Gaza Strip and subsequent regional conflicts, has led to increased risks for shipping routes, prompting vessels to avoid the Red Sea and seek alternative, costlier paths.**