The International Monetary Fund is sounding the alarm on the global economy, warning that it may lose up to 7% of GDP due to the cost of living crisis, high levels of debt, and rising geopolitical tensions.

In a new report released Sunday, it warned that as trade restrictions between nations grow, the world risks what it refers to as, “geoeconomic fragmentation.”

The IMF notes, trade fragmentation’s longer term cost varies, ranging from 0.2% of global output to almost 7%. It points out that is about the combined annual output of both Germany and Japan, adding, “If technological decoupling is added to the mix, some countries could see losses of up to 12% of GDP.”

However in the report, the IMF points out the full impact would likely be even larger. Fragmentation would not only affect trade restrictions and barriers to the development of technology, but it would also have effects on cross-border migration, reduced capital flows, as well as a massive decline in international cooperation “that would leave us unable to address the challenges of a more shock-prone world.”

According to the IMF, the effects of fragmentation would vary, with lower-income consumers in more wealthy nations suddenly being denied the ability to purchase cheaper imported goods. The report warned, “Small, open-market economies would be hard-hit. Most of Asia would suffer due to its heavy reliance on open trade.”

The report cited the fact that technology spillovers into emerging and developing economies, which have allowed productivity to be boosted and living standards to be raised would no longer occur. As a result, instead of catching up to advanced-economy standards of living and income levels, those underdeveloped nations would continue to fall even further behind.