IMF warns of vulnerabilities in the global economy

The International Monetary Fund (IMF) last Tuesday warned of alleged risks that the global economy may suffer and urged the authorities to stay on alert to rising levels of debt that could pose a medium-term danger.

He also stressed that global growth would have been 0.5% lower without last year’s measures, which included the largest combined number of interest rate cuts in advanced and emerging economies since the 2008 financial crisis.

For his part, Tobias Adrián, director of Monetary Affairs and Financial Markets of the IMF, and his second-in-command, Fabio Natalucci, say that vulnerabilities in the economy could aggravate its growth, placing it in a very dangerous scenario.

“According to a long-term vision (…) to alleviate global financial conditions so late in the economic cycle and the continued increase in financial vulnerabilities – including the rise in asset values ​​at very high levels in some markets and countries, growth of debt and large capital flows to emerging markets – could threaten growth in the medium term.”

Although there have been no “signs of repercussions so far”, the authorities should monitor emerging risks by taking measures to “reduce the possibility that such vulnerabilities can enhance the adverse impacts of blows to the global economy.” Experts say that applying the use of other tools such as capital reserves against cyclicals could be very useful to counteract future inconveniences.

K. Villarroel

Source: latercera