The World Economic Forum’s latest fragmentation report, ‘Deepening Divides’, published in June 2026, puts the annual cost of a splintering world economy at $213bn to $307bn. Up that to $6.9tn, or 6.4% of global output, if the break accelerates.
Fragmentation now reaches even allied economies, the report finds, yet it falls hardest on the countries furthest from the major trading blocs as they face a projected loss of 10.7% of output – almost double the global figure. That number is typically viewed as a verdict on frontier markets’ fragility. But the economies most exposed to fragmentation may also be the best placed to grow through it, insulated by the coupling of gross domestic product and energy growth that has defined Asia’s modern rise and long since departed the West.
Fragmentation reaches frontier economies first through the price of capital. They cannot raise at home what their growth requires, so they borrow abroad, in currencies and on terms they do not set. When the financial system splits, capital retreats towards the blocs and their allies, and the markets left outside pay more for less reliable access to it. The WEF report is explicit that development finance for these countries grows more expensive and less predictable. Higher risk premiums and cautious lenders stall the investment on which growth depends. That much the frontier cannot fix on its own.
The electrification lever
What the frontier can fix is its own power. A country cannot set the price of foreign capital, but it can decide how much electricity it generates at home: the one large input it can bring in-house and fix the price of for 20 years. That makes electrification the lever that fragmentation cannot easily reach. Money can be made dearer overnight but a solar plant already built and paid down keeps producing at the same cost, whatever the credit cycle does. The frontier is taking this decision fastest in exactly the markets the report marks as most exposed.
The relevance for economic growth is that electricity, specifically, is what now drives it. Electricity passed oil as the largest source of useful energy worldwide, and its share of demand is rising fastest where economies are industrialising.
In Asia, electricity use and output have climbed in near lockstep for two decades, while the West decoupled the two long ago. The region has driven about three-quarters of the growth in global electricity demand since 2000, electrifying roughly five times faster than the West and drawing 26% of its final energy from electricity by 2023, at lower incomes per head than the West had reached at the same stage. In economies short of reliable power, factories, cold chains, transport and data are capped long before demand is, so adding electricity releases output that was waiting on it. The link is tightest in precisely the power-short economies fragmentation threatens most.
Fuelling growth
Where the grids are weakest, the case has already been settled: a mine that once paid more than $1 per kilowatt-hour for diesel power now draws the same electricity from on-site solar and storage at less than 20% of that cost – secure at that price for over 15 years. That is close to an 85% cut, with the bill fixed for two decades instead of resetting by the next conflict in the Gulf.
When oil shipments through the region were disrupted in early 2026, communities, factories and mines that ran on renewables ran at full output on power they already had, while diesel-fed rivals absorbed the pain of the price shock. The same arithmetic is climbing the chain, from off-grid mines to factories on failing grids to the heavy industry behind them, because the spread between a litre of imported diesel and a panel that has already paid for itself only widens. The most expensive power in the world has turned into some of the cheapest in the markets capital still treats as un-investable. This applies beyond electricity.
What an economy produces for itself cannot be embargoed, repriced by a distant market or held to ransom over a shipping lane. In a fragmenting world, that quality earns a growing premium. Power is where it bites first because the cost of generating electricity at home has already dropped below the cost of importing the fuel to make it. The same logic runs through food, payments and other capacities these economies are choosing to build rather than buy. Electricity is simply where it pays today.
The benefit does not stop at the frontier’s border. An ageing developed world with saturated demand and a glut of savings is short of somewhere for its capital to earn a real return and new supply to hold down prices. A frontier that electrifies and grows offers both.
Sovereignty of power
Emerging and developing economies already account for most of global growth. Steadier supply from those markets does more to cool imported inflation than another turn of the rate screw. The $6.9tn, the report fears, is the cost of letting these economies stall.
None of this comes free of capital. Domestic power does not lower the cost of borrowing, deepen a shallow market or replace the open trade the WEF is pleading to preserve. The money to build still has to be structured so that institutional investors will hold it. The coupling of electricity and growth is strong in power-short economies, but it is not a universal law. Of every exposure a fragile economy carries, its electricity supply is the one it can act on now, at a price already below the alternative.
The dividing line of this decade falls between economies that make their own power and those that import their fuel. The first can grow through a fragmenting world, the second pays for it twice: once at the pump and in the currency spent to buy the fuel. Financing the first is the surest way to buy growth, steady supply and a return on capital at the same time. And financing economies the report counts as most exposed serves the rest of the world’s interest as much as their own.
Matt Tilleard is Co-Founder and Chief Executive Officer of CrossBoundary Energy.
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