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Trade fragmentation to curb global growth, raise inflation, ECB's Schnabel says

Published by Global Banking & Finance Review

Posted on April 2, 2025

1 min read

· Last updated: January 24, 2026

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Trade fragmentation to curb global growth, raise inflation, ECB's Schnabel says

Trade Fragmentation May Hinder Growth and Boost Inflation

FRANKFURT (Reuters) - Global inflation could surge in case of trade fragmentation caused by a trade war and growth is likely to take a hit, European Central Bank Isabel Schnabel said in a presentation on Wednesday.

A severe disruption in global trade could push up inflation by several percentage points in the initial years while 'mild decoupling' would have an impact below 1%, which could take years to dissipate, Schnabel said in her slides.

"Trade fragmentation is structurally harmful for economic growth and inflation," she said.

(Reporting by Balazs Koranyi; Editing by Andrew Heavens)

Key Takeaways

  • Trade fragmentation can significantly increase global inflation.
  • A severe trade disruption could raise inflation by several percentage points.
  • Mild decoupling may have a smaller impact on inflation.
  • Economic growth is structurally harmed by trade fragmentation.
  • The effects of trade fragmentation could last for years.

Frequently Asked Questions

What is the main topic?
The main topic is the impact of trade fragmentation on global growth and inflation, as discussed by ECB's Isabel Schnabel.
How does trade fragmentation affect inflation?
Trade fragmentation can increase global inflation by several percentage points in severe cases, while mild decoupling has a smaller impact.
What is the impact of trade fragmentation on economic growth?
Trade fragmentation is structurally harmful to economic growth, potentially causing long-term negative effects.

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