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IMF warns of more risks

September 3, 2015

The International Monetary Fund has said China's economic slowdown and market turmoil may have a broader impact on the global economy than originally expected. But the Asian nation isn't the only cause for concern.

https://p.dw.com/p/1GQP7
Chinese cargo ship
Image: picture-alliance/dpa/Wang Chun

The IMF highlighted a cocktail of potentially dangerous risks for the global economy, ranging from a mega strong dollar and depreciating currencies in emerging markets to falling commodity prices and weaker capital inflows.

The lender's note came ahead of a two-day meeting in Turkey of finance ministers and central bankers from the G20 group of leading economies.

"Risks are tilted to the downside, and a simultaneous realization of some of these risks would imply a much weaker outlook," the note said.

The Washington-based institution had already lowered its global growth forecast for 2015 to 3.3 percent, adding that it expected China's GDP to expand by no more than 6.8 percent this year.

Growth-friendly policies

The IMF encouraged China to keep up its reform pace despite the recent turmoil on the stock markets.

"The recent sharp equity market corrections should not discourage authorities from continuing with reforms to give market mechanisms a more decisive role in the economy, eliminate distortions and strengthen institutions, the note said.

Despite the problems at hand, the IMF said it was confident that growth would "pick up moderately" in the world's advanced economies, not least helped by the impact of cheaper oil prices. It recommended that the G20 nations should stick to loose monetary policies for the time being.

hg/cjc (Reuters, AFP)