Excessive risk taking and geopolitical hazards pose new threats to a global economy already experiencing an uneven and weaker than expected recovery, the International Monetary Fund has warned.
In an assessment prepared for finance ministers and central bank governors of the G20 countries, the Washington-based fund said problems in the US, the eurozone, China, Japan, Russia and Latin America meant growth would not meet the 3.6% pencilled in for 2014 in April.
The IMF said it expected the world economy to pick up speed during 2015 because long-term interest rates were low, central banks were supporting activity and share prices were rising. But it issued a warning that new threats could be building even before the global economy had recovered fully from its biggest downturn since the Great Depression of the 1930s.
“New downside risks associated with geopolitical tensions and increasing risk taking are arising,” the IMF said. It said other risks stemmed from low inflation, a permanent slowdown in growth rates in the west, lower growth in emerging economies and the possible disruption to financial markets that might be caused when the US Federal Reserve starts to raise interest rates.
“Despite setbacks this year, global recovery is proceeding but remains unbalanced,” the paper on global prospects and challenges said. “In many advanced economies legacies of the boom and subsequent crisis – including high private and public debt – still weigh on the recovery despite relaxed financial conditions.”
via The Guardian