Article / Editorial Article
PhD, Post-Doctorate | Department of Economics Bangladesh University of Business and Technology.
Muhammad Mahboob Ali
Post-Doctorate,
Department of Economics Bangladesh University of Business and Technology.
1 July 2025 ; 15 August 2025
Geo-economics fragmentation, conflict economics, resilience frameworks, developing economies, polycrisis management.
This editorial analyzes the multidimensional economic consequences of contemporary geopolitical conflicts through a resilience framework. Utilizing International Monetary Fund’s (IMF, 2025) projections and empirical evidence, it quantifies systemic impacts while proposing adaptive strategies for developing economies navigating polycrisis conditions. The study highlights the urgent need for institutional innovation in global economic governance. Conflicts between nations and regions affect trade, investment, and economic stability. Issues such as trade wars, sanctions, and military conflicts can lead to uncertainty and disrupt global supply chains. The International Monetary Fund’s April 2025 World Economic Outlook projects that “geoeconomic fragmentation could reduce global output by up to 7% in the long term” (IMF, 2025), with three critical manifestations:
First, the U.S.-China trade conflict has generated a 15% reduction in bilateral commerce since 2018 (Peterson Institute for International Economics [PIIE], 2023), significantly disrupting global value chains. Second, semiconductor production has declined by 12% globally (IMF, 2025), creating bottlenecks across manufacturing sectors. Third, the technology sector has absorbed $120 billion in losses, particularly affecting emerging markets dependent on tech exports.
Women stepped out of the confines of their homes to participate in the workforce, improving their families’ and their own financial situations and over time, they extended their employment, pursuing more meaningful work and establishing genuine careers. (Goldin, 2024)
These developments validate Ali’s (2020) proposition that developing economies must reengineer financial systems, particularly through mechanisms that align “micro savings with micro investment via social networking which will benefit not only male but also female”. Such approaches may mitigate the destabilizing effects of economic decoupling.
South Asian Flashpoints
The India-Pakistan conflict has yielded three measurable consequences: immediate trade losses exceeding $12 billion (World Bank, 2024); a 40% contraction in cross-border FDI flows; and critical disruptions to pharmaceutical supply chains, jeopardizing 25% of global generic drug production. These impacts demonstrate how regional conflicts generate disproportionate consequences for global health security.
The Iran-Israel confrontation has triggered 15% volatility in oil prices (IMF, 2025), forcing $80 billion in shipping route diversions around Africa. Simultaneously, the regional technology sector has contracted by 25%, undermining Middle Eastern digital transformation agendas. As Nobel laureate Duflo (2024) observes, “Modern conflicts disproportionately erase developmental gains, with 90% of costs borne by vulnerable populations” – a reality starkly evident in these cases.
| Indicator | Pre-Conflict | Post-Conflict |
|---|---|---|
| Micro savings penetration | 38% | 22% |
| Cross-border microloans | $120M | $18M |
| Women’s financial inclusion | 41% | 29% |
Source: World Bank Financial Inclusion Database (2025)
€200 billion in redirected trade flows (European Central Bank [ECB], 2022)
345 million facing food insecurity (World Food Programme [WFP], 2023)
Economic weaponization has reached unprecedented levels:
300% increase in sanctions since 2010 (IMF, 2025)
$300 billion in frozen Russian assets
40% growth in BRICS local currency trade (United Nations Conference on Trade and Development [UNCTAD], 2023)
Financial System Innovations
Two models show particular promise: social banking architectures (Ali, 2020) that democratize finance, and BRICS local currency mechanisms which have grown by 40% since UNCTAD (2023). These approaches reduce dependency on unstable global financial pipelines.
Strategic implementation of digital trade corridors and commodity reserves could buffer against supply chain fractures. Such systems proved effective during pandemic disruptions and warrant scaling for conflict scenarios.
Institutions must develop climate-conflict early warning systems and UN-mediated humanitarian trade windows. Encouraging micro savings can empower individuals to transition into micro investment. When people save regularly, they can invest in opportunities that contribute to local economies, increasing overall resilience. These would provide crucial response mechanisms when crises emerge.
The IMF’s 2025 data conclusively demonstrates the inadequacy of traditional economic models in polycrisis conditions. Developing economies must pioneer hybrid solutions that combine:
localized financial ecosystems;
conflict-responsive supply chains; and
reinforced South-South cooperation frameworks.
Institutional innovation at this scale represents the most viable path to global economic resilience. In an era marked by polycrisis and geopolitical tensions, enhancing global economic resilience requires a multifaceted approach that includes strengthening the link between micro savings and micro investment. The bottom of the pyramid must break free from the vicious cycle of poverty. By empowering individuals and communities with the tools to saving and investment, we can build a more resilient global economy capable of withstanding future challenges.
The author declares no competing financial interests.
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- International Monetary Fund. (2025). World economic outlook: A Critical Juncture amid Policy Shifts. https://www.imf.org/en/Publications/WEO/Issues/2025/04/22/world-economic-outlook-april-2025
- Peterson Institute for International Economics. (2023). The costs of economic decoupling. https://www.piie.com
- Goldin, C. (2024). Nobel lecture: An evolving economic force. American Economic Review, 114(6), 1515–1539.
DOI: https://doi.org/10.1257/aer.114.6.1515 - Ali, M. M. (2020). Societal banking: An answer to informal sector’s funding needs. The Business Standard. https://www.tbsnews.net/economy/societal-banking-answer-informal-sectors-funding-needs-39109
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