The Group of 20 countries must plan now for a coordinated stimulus program to keep a slowing global economy from stalling, International Monetary Fund staff said in a report Wednesday.
The report was prepared for senior G20 officials meeting in Shanghai this week amid falling equity markets, volatile currencies and signs of economic weakness throughout the world, Reuters said.
“The G20 must plan now for coordinated demand support using available fiscal space to boost public investment,” IMF staff said in the report.
The Shanghai meeting is already being compared to the G20 meeting in April 2009, when officials agreed on a coordinated stimulus to prevent a worldwide depression during the global financial crisis.
US Treasury Secretary Jack Lew downplayed expectations of a G20 emergency plan this week, telling Bloomberg Television that some world economies were doing better than thought and that investors should not “expect a crisis response in a non-crisis environment”.
But the IMF staff said global economic growth was slowing and financial conditions were tightening for emerging economies, where commodity exporters have been hit hard by an economic slowdown in China.
“These developments point to higher risks of a derailed recovery,” the report said.
In January, the IMF cut its forecast for 2016 global economic growth to 3.4 percent from 3.6 percent. The staff report said another downgrade was likely in April.
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