The International Monetary Fund warned the world is at risk of a fresh financial crisis leading to global recession if governments and policymakers misgovern market stability risks.
IMF’s head of financial stability José Viñals said the bad scenario does not depend on severe presumptions at all, indicating the increase in risk premiums and corporate defaults among emerging economies, and decrease in appetite for riskier assets.
The institution, in its bi-annual global financial stability report, imitated the effects of the pressing financial perils in emerging markets turning sour from another shock to confidence or policy mishaps.
IMF projected spending growth would slide sharply in advanced and emerging economies, resulting in a shortfall in output of 2.4% by 2017. Global growth would face the likelihood of slumping below 2% for a year.
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