The global economy is slowing more than expected and a sharp downturn could require world leaders to co-ordinate stimulus measures, the International Monetary Fund says.
The global lender’s semi-annual World Economic Report points to the US-China trade war and a potentially disorderly British exit from the European Union as key risks and warns the chances of further cuts to the outlook are high.
Some major economies, including China and Germany, might need to take short-term actions, the IMF says.
“This is a delicate moment for the global economy,” IMF chief economist Gita Gopinath said in a news conference in Washington to discuss the report on Wednesday.
Governments may need to open their wallets at the same time “across economies” if the slowdown becomes more serious, Gopinath said, adding that loose monetary policy might also be needed.
The comments provided an eerie warning to the global officials gathering in Washington this week for the spring meetings of the IMF and World Bank.
The world engaged in co-ordinated fiscal stimulus to counter the 2008 financial crisis.
In its third downgrade since October, the IMF said the global economy will likely grow 3.3 per cent this year, the slowest expansion since 2016. The forecast cut 0.2 percentage point from the IMF’s outlook in January.
The projected growth rate for next year was unchanged at 3.6 per cent.