IMF warns of another meltdown; calls for action

The global agency stated it was critical that the side effects of the exceptional policies introduced to combat the 2008 crisis are addressed in order to prepare the world to respond to the next one.

In its latest survey, the International Monetary Fund has warned that even after 10 years aaof the global financial crisis, the world remains vulnerable to another meltdown.
 
The IMF released two chapters of its World Economic Outlook, which is due to be published next week. The two chapters talk of actions taken during the global financial crisis in 2008 that have had significant side effects even though they prevented a worse outcome and higher unemployment.
 
The report warns that ultra-low interest rates and growing public debt are of particular concern and that significant challenges loom for the global economy.
 
The report blamed the  extended period of ultra-low interest rates in advanced economies and noted that it has led to the build-up of financial vulnerabilities.
 
The IMF stated it was critical that the side effects of the exceptional policies introduced to combat the 2008 crisis are addressed in order to prepare the world to respond to the next one.
 
Ten years ago in September 2008, the collapse of the Lehman Brothers investment bank had sparked a global financial crisis.
 
Though central banks like the US Federal Reserve and the European Central Bank had helped prevent a deeper crisis then by bailing out institutions and stimulating economies, this may not be possible if another crisis emerged, said the IMF.
 
The reason being that some of the crisis management tools deployed in 2008-09 are no longer available, the report noted.
 
Notably, recently IMF chief Christine Lagarde had said risks to the global economy had begun to be visible and were slowing growth. She had exhorted world leaders to work unitedly to fix the global trading system and not destroy it and ensure the benefits of this were felt throughout society.
 
Source: news.com.au

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