Lloyd’s projects $14.5t loss from hypothetical global conflict

The scenario highlights the vulnerability of global trade.

Lloyd’s released a scenario projecting potential global economic losses of $14.5t over five years due to a hypothetical geopolitical conflict that disrupts global trade and supply chains. 

This scenario is part of Lloyd’s systemic risk series, which aims to provide risk managers, governments, and insurers with data-driven assessments of major global threats.

The scenario highlights the vulnerability of global trade, with over 80% of the world’s imports and exports – roughly 11 billion tons of goods – being transported by sea at any time. 

Closure of major trade routes due to geopolitical conflict would severely impact the resources necessary for economic resilience. 

The projected economic damage comes mainly from infrastructure destruction in conflict zones and the disruption of global trade networks, driven by sanctions and compromised shipping routes.

The extent of economic loss would vary by region, depending on factors such as involvement in the conflict and reliance on international trade. 

Europe, for example, which depends heavily on imports of semiconductors for its car and electronics industries, could lose up to $3.4t.