The International Monetary Fund (IMF) has warned that risks to the global economy are mounting amid slowing growth in China, tanking emerging economies and unease over international financial markets.
In view of these challenges, the IMF urged the central banks of advanced economies to "maintain supportive policies" and refrain from raising interest rates too quickly.
In a note prepared for a meeting of Group of 20 central bank and finance chiefs this weekend in Ankara, Turkey, the IMF said the performance of many economies is again falling short of expectations.
MAINTAIN SUPPORTIVE POLICIES
The IMF urged the central banks of advanced economies to 'maintain supportive policies' and refrain from raising interest rates too quickly.
It called for action to boost flagging growth rates and raise the medium-term performance of the world's largest economies from the current "moderate" level. Productivity growth in advanced economies has also been persistently weak, the fund noted.
Meanwhile, China's transition to slower growth, while not unexpected, is having significant cross-border repercussions, reflected in weakening commodity and stock prices.
Financial market volatility has spiked over the past month, accompanied by declining commodity prices and downward pressure on many emerging-economy currencies.
These challenges mean that accommodative monetary policies remain essential in many advanced economies, the IMF said, especially since an expected boost from lower oil prices has failed to materialise and rates of inflation remain low.
The fund called on the United States Federal Reserve to "remain data-dependent" and not rush to raise interest rates since there has been "little evidence of meaningful wage and price pressures so far".
Amid the turmoil, Asian economies appear to be holding up and are doing "pretty well", IMF chief Christine Lagarde said on Wednesday while in Jakarta on a two-day visit.
"What has been demonstrated in the last few weeks is how much Asia is at the core of the global economy, and how much disruptions occurring in one market in Asia can actually spill over to the rest of the world," she said.
Despite external pressures and the slower pace of expansion in Asia, Ms Lagarde said "this whole region, in the world, is doing pretty well", and would continue to be a key source of global growth.