Threat of instability and recession in emerging economies, and legacy of debt and disharmony in eurozone among ‘triad of risks’ outlined in stability report
The risk of a global financial crash has increased because a slowdown in China and decline in world trade are undermining the stability of highly indebted emerging economies, according to the International Monetary Fund (IMF).
Traders on Wall Street during a summer of market turmoil triggered by China’s attempt to increase its flagging exports with a devaluation of its currency (Image: J. Lane/EPA)
The Washington-based lender of last resort said the scale of borrowing by emerging market countries, whose debts are vulnerable to rising interest rates in the US, mean policymakers need to act quickly to shore up the financial system.
Next financial crash is coming – and before we’ve fixed flaws from last one
Read more
José Viñals, the IMF’s financial counsellor, said the threat of instability and recession hanging over economies including China, Brazil, Turkey and Malaysia was one of a “triad of risks” that could knock 3% off global GDP. The second, he said, was the legacy of debt and disharmony in Europe, while the third is centred on battered global markets that are more likely to transmit shocks rather than cushion the blow.
Read more: The Guardian