LONDON:
According to a statement released by Lloyd’s of London, the global economy may incur losses totalling $14.5 trillion over five years due to a hypothetical geopolitical conflict that disrupts supply chains.
Lloyd’s reported that the projected economic impact stems from significant damage to infrastructure in the affected region and the potential disruption of shipping routes.
Recent conflicts, such as those in Ukraine and Gaza, have already impacted shipping routes in the Black Sea and Red Sea.
Lloyd’s highlighted that over 80% of the world’s imports and exports—approximately 11 billion tons of goods—are transported by sea at any given time. Therefore, the closure of major trade routes due to geopolitical conflict poses a significant threat to the resources essential for a resilient economy.
The report characterized the risk of such geopolitical conflicts as a systemic one—low in likelihood but potentially high in impact.
Additionally, Lloyd’s noted that it has collaborated with the Cambridge Centre for Risk Studies to investigate other potential systemic risks, including cyberattacks and extreme weather events.
