IMF warns global economy is 'highly vulnerable'

Report says G20 nations should develop measures that could be implemented quickly if global growth keeps wilting.

    The IMF has trimmed its economic forecast for global growth for both 2016 and 2017 [Everett Kennedy Brown/EPA]
    The IMF has trimmed its economic forecast for global growth for both 2016 and 2017 [Everett Kennedy Brown/EPA]

    The International Monetary Fund has said that the global economy is "highly vulnerable" and urged the United States and other large nations to prepare contingency plans that could be rolled out quickly.

    The report was prepared for senior officials of the G20, the world's 20 largest economies, before a meeting in Shanghai later this week amid falling stock markets, volatile currencies and signs of economic weakness.

    The IMF report said a fragile global recovery has weakened further in the face of falling oil prices and diminished growth prospects in China and other emerging market countries.

    "The G20 must plan now for coordinated demand support using available fiscal space to boost public investment," IMF staff said in the report.


    READ MORE: Saudi Arabia 'running on empty in five years'


    It added that G20 nations should also develop additional measures that could be implemented quickly if growth keeps wilting.

    The IMF last month trimmed its economic forecast for global growth by 0.2 percentage points for both 2016 and 2017, reducing its projection to 3.4 percent this year and 3.6 percent next year.

    The new report said a further downgrade is "likely" in April when the IMF's next forecast is released.

    The organisation said that countries at the centre of the current Syrian refugee crisis and epidemics such as the Zika virus "are shouldering a burden for others and could be backed up by a coordinated global initiative".

    Middle East tax reform

    On Tuesday, IMF chief Christine Lagarde renewed her call for greater taxation and fiscal reforms as a pathway to political stability in her second speech this week in the Middle East.

    "I think the economic issues have to be at the table," Lagarde said in remarks at the Global Women's Forum in Dubai.

    "We cannot stop the warriors, we cannot bring truce, but certainly we can help with good economic policies ... with a state that actually works for the benefit of people, that collects tax, that organises public spending in an efficient way for countries, that finances infrastructure projects where it's needed."

    Lagarde also said oil-dependent states face a "new reality" as global prices hover around $34 a barrel, down from more than $110 in mid-2014.

    SOURCE: Agencies


    YOU MIGHT ALSO LIKE

    'We scoured for days without sleeping, just clothes on our backs'

    'We scoured for days without sleeping, just clothes on our backs'

    The Philippines’ Typhoon Haiyan was the strongest storm ever to make landfall. Five years on, we revisit this story.

    How Moscow lost Riyadh in 1938

    How Moscow lost Riyadh in 1938

    Russian-Saudi relations could be very different today, if Stalin hadn't killed the Soviet ambassador to Saudi Arabia.

    Unification: Saladin and the Fall of Jerusalem

    Unification: Saladin and the Fall of Jerusalem

    We explore how Salah Ed-Din unified the Muslim states and recaptured the holy city of Jerusalem from the crusaders.