Former IMF Chief Economist Dr. Gita Gopinath has sounded a stark warning: a sudden global market crash could erase as much as $35 trillion in wealth, largely owing to the world’s overreliance on American stocks.
Gopinath argues that the global financial system has become dangerously dependent on the performance of the U.S. equity markets. When the U.S. market stumbles, ripple effects could cascade across regions, magnifying losses worldwide.
A key concern she raises is that markets today lack the buffers that existed in past crashes. In earlier crises, central banks and regulators could act with time to stem panic. But in today’s hyperconnected and algorithmic trading environment, sharp declines may accelerate before policy tools can react.
Additionally, she points out that many emerging and developing markets are especially vulnerable. Their exposure—through foreign investments, financial markets, and even through dollar-denominated debt—leaves them at greater risk of contagion when the U.S. market falters.
Gopinath’s message is not merely alarmist — she urges structural reforms, better risk management, and more globally coordinated oversight to reduce dependency and enhance resilience. Without such changes, she cautions, the next crash could dwarf previous crises in scale.
