The next major economic crisis will probably be triggered by some global shift in behavior, not just a shift in policy, according to an International Monetary Fund (IMF) report on Thursday.
While some countries are already moving to the left, the global economy is likely to move to the right, and we have a limited amount of time to react, said an IMF report on global economic growth released Thursday.
It also raised some troubling warnings about the fragility of global markets.
The global economy, which has experienced five major recessions since 2008, will not be able to absorb a global shift to the far right that would require some kind of global shock, the IMF report said.
It added that some countries in Europe and Asia could lose their competitive edge and fall into recession.
That’s a risk we don’t want to be taking.
We are all in a fragile global environment.
We are all on edge and are afraid of what could happen,” said Olivier Blanchard, president of the IMF.
The report said a large global shift, which would likely include a sharp fall in interest rates, would cause an increase in volatility and uncertainty.
That would have dire implications for the financial markets.
A recent report by Barclays suggested that the world could lose $15 trillion in value by 2030, if interest rates continue to fall at their current pace.
That would make a big impact on U.S. stocks, which have lost more than $2 trillion since October.
The IMF also warned that a shift to a far right populist economic stance, in which populist governments have been in power, could trigger further global crises.
We could be facing a period of global economic uncertainty in the next few years, which is really concerning.
That could have a serious impact on financial markets and the global economic recovery, the report said, noting that it could also undermine U.N. efforts to tackle climate change.
As the world moves to the centre, it could be a matter of seconds before there is another major crisis, said Blanchart, who also chairs the IMF’s policy committee.
It will be much more difficult to avoid a global economic crisis in the future.