IMF Warns About Growing Risks to Global Economy

Risks to the global financial system are rising once again eight years after the last crisis struck, a leading watchdog warned yesterday.

The International Monetary Fund used its twice-yearly Global Financial Stability Report to issue a series of warnings about fragility around the world amid ‘a moderate and uneven global economic recovery’.

It highlighted the threat of higher interest rates in the US, a Greek exit from the eurozone, weakness among European banks, and wild swings on currency markets and in the oil price.

The IMF, lead by Christine Lagarde , pictured, also said risks are ‘rotating’ away from banks to shadow banks and from advanced economies to emerging markets.

‘Risks to the global financial system have risen since October and have rotated to parts of the financial system where they are harder to assess and harder to address,’ said Jose Vinals , financial counsellor at the IMF, as he launched the report in Washington . He said the first interest rate rise in the US could set off turmoil in the financial markets as investors shift money from the rest of the world to America.

The Fed is expected to raise rates later this year having frozen them at close to zero since the depths of the Great Recession.

The prospect of higher interest rates has driven the dollar higher against currencies around the world – creating more volatility in major exchange rates than at any time since the financial crisis.

‘The dollar has strengthened more against major currencies during the past nine months than it has during any similar period since 1981,’ said the IMF report.

via Kitco

Content is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Business Information & Services, Inc. or any of its affiliates, subsidiaries, officers or directors. If you would like to reproduce or redistribute any of the content found on MarketPulse, an award winning forex, commodities and global indices analysis and news site service produced by OANDA Business Information & Services, Inc., please access the RSS feed or contact us at info@marketpulse.com. Visit https://www.marketpulse.com/ to find out more about the beat of the global markets. © 2023 OANDA Business Information & Services Inc.