The IMF warned on Tuesday the world currently faces an increasing “risk of economic derailment” and requires urgent action to improve demand after economic figures highlighted the worst drop in Chinese exports since 2009.
David Lipton, the IMF’s First Deputy Managing Director cautioned policy makers that the global economy is “clearly at a delicate juncture”.
He said that a mixture of both fiscal and monetary policy and structural changes must be made to improve growth and protect world economies from risks such as deflation in Japan and unfilled infrastructure requirements in the US. He said policymakers need to take note of slowing growth and fresh threats which have developed through turmoil in commodity and financial markets.
“Now is the time to decisively support economic activity and put the global economy on a sounder footing.”
He noted the most concerning signs of trouble across global markets has been the “sharp retrenchment in global capital and trade flows” in the past year.
The concerns were outlined by the weak trade figures which China announced on Tuesday. As demand for commodities such as crude oil, iron ore and copper dropped the global demand for manufactured goods also fell which largely affected import and export numbers.
In comparison to the prior year, in dollar terms, Chinese exports fell by 25.4 percent in February, this was the biggest decline in one month since 2009. Imports dropped 13.8 percent, slightly improved on January’s 18.8 percent decrease.
The IMF is growing ever more uneasy about the current condition of the global economy after signs which could indicate of a further slowdown. It has indicated that it is likely to reduce its 3.4 percent growth forecast for 2016 during its next set of predictions are released in April.