Major cracks in global economy closer than anticipated, says IMF
THE International Monetary Fund issued a stark warning on the future health of the global economy, saying major cracks were now “closer” than it had anticipated and that growth will soon “fade”.
In a highly negative speech Mitsuhiro Furusawa, deputy managing director of the world’s lender of last resort, said that the outlook for the global economy had worsened. It was currently enjoying its best run of growth since the 2009 financial crisis, but there were “risks looming on the horizon that could derail this recovery”, Mr Furusawa said.
He added: “Some of these risks are now closer than we had anticipated, injecting new urgency on policy actions to sustain the momentum and resilience of the global economy.”
The rate of growth would “fade” as the impact of money invested via tax cuts in the US and via investment in China wears off. It would also start to weaken “as interest rates rise and financial conditions tighten with monetary policy normalisation by major central banks”.
There was also a warning sounded about the impact of an emergent trade war between the US and China.
Mr Furusawa said: “The prospect of trade restrictions threatens to undermine confidence and derail global growth permanently.”