WASHINGTON • The International Monetary Fund (IMF) strengthened its call for concerted action to forestall a global economic slide, warning of the increasing risks of policy inertia.
IMF deputy managing director David Lipton said there is an increasingly "dangerous" view that policymakers worldwide have exhausted their options for boosting growth or have simply lost their will, Agence France-Presse reported.
To counter that, he said, leaders must expand efforts, including fiscal and monetary stimulus and urgently needed structural reforms, to support growth.
The comments come after weaker-than-expected trade figures from China showing that exports plunged by a quarter from a year ago. Persistent worries of a slowdown in China rekindled fears for the global economy.
These concerns have weighed heavily on financial markets this year with equity price indexes down more than 6 per cent so far, according to CNBC. Oil and commodity prices are also a cause of worry.
NEED FOR MORE FORCEFUL ACTION
The downside risks are clearly much more pronounced than before, and the case for more forceful and concerted policy action has become more compelling.
MR DAVID LIPTON, IMF deputy managing director
IMF deputy managing director David Lipton (right) said there is an increasingly "dangerous" view that policymakers worldwide have exhausted their options for boosting growth or have simply lost their will.... To counter that, he said, leaders must expand efforts, including fiscal and monetary stimulus and urgently needed structural reforms, to support growth.
"The downside risks are clearly much more pronounced than before, and the case for more forceful and concerted policy action has become more compelling," according to prepared remarks by Mr Lipton.
Central banks in the euro zone, Switzerland, Sweden, Denmark and Japan have all turned to negative interest rates in hopes of pushing more money into the economy.
But, it is not clear whether such steps will actually benefit the wider economy, analysts say.
Mr Lipton said the turbulent downturn in global markets is a reaction in part to worries that policymakers have run out of options, or lost their resolve.
"For the sake of the global economy, it is imperative that advanced and developing countries dispel this dangerous notion by reviving the bold spirit of action and cooperation that characterised the early years of the recovery effort."
Fiscal policy - government spending and tax breaks - "has to take a more prominent place in the policy mix," Mr Lipton told a conference of the National Association for Business Economics on Tuesday.
"The burden to lift growth falls more squarely on advanced economies" which have fiscal room to move, he said.
Last month, the IMF warned that the world economy is "highly vulnerable" and called for action from the Group of 20 leading economies.
The IMF has already said it is likely it will downgrade its current forecast of 3.4 per cent for global growth when it next releases its economic predictions in April.
Mr Lipton said the IMF's most recent projections for growth "may no longer be applicable" amid a pullout of capital from emerging economies and a sharp fall in global trade.
"Volatile financial markets and low commodity prices (are) creating fresh concerns about the health of the global economy," he said.
He also warned countries against trade protectionist and weak-currency tactics to boost their growth, calling those "zero sum economic policies" that, over the long run, "will make all countries worse off".