IMF sees a debilitated world in face of upcoming crisis

The first deputy man­ag­ing di­rec­tor of the In­ter­na­tional Mon­e­tary Fund (IMF), David Lip­ton, yes­ter­day warned that tur­moil is com­ing to the global econ­omy and that cen­tral banks are not well enough pre­pared to deal with them. The IMF has urged gov­ern­ments to take ad­van­tage of the last two years of rel­a­tive boom to re­form and pro­tect them­selves from new mishaps, Lip­ton ex­plained dur­ing a con­fer­ence or­gan­ised by the Bloomberg eco­nomic agency.

“But I, like many of you, see that clouds are form­ing and fear that the work done to pre­vent crises is in­com­plete.” “We can­not ex­pect gov­ern­ments to have the room for ma­noeu­vre that they had ten years ago to re­spond to the re­ces­sion,” said Chris­tine La­garde’s num­ber two, who urged gov­ern­ments to co­op­er­ate to solve the prob­lems that could lead to a new cri­sis.

How­ever, the IMF also warned that the most im­me­di­ate risk is the trade war be­tween the US and China, and in that re­gard, it re­quested that the truce agreed be­tween the two eco­nomic gi­ants dur­ing the re­cent G20 Sum­mit in Buenos Aires lead to a “last­ing agree­ment that avoids an in­ten­si­fi­ca­tion or ex­ten­sion of ten­sions,” Lip­ton said.

Oth­er­wise, he warned, there is a risk of “frag­men­ta­tion” in the world econ­omy and a new re­ces­sion.