Escalating risks to the global economic recovery mean the US and other major economies should not sharply tighten short-term fiscal policy, the International Monetary Fund has warned.
Releasing its latest assessment of the global economy on Tuesday, the fund said that financial instability, exacerbated by poor policymaking, had worsened considerably and threatened growth.
“The global economy has slowed, financial volatility and investor risk aversion have sharply increased, and performance has continued to diverge across regions,” the report said. “Policy indecision has exacerbated uncertainty and added to financial strains, feeding back into the real economy.”
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