World leaders urged to push on with reform or risk slump
The IMF urged world leaders to pick up the pace on fiscal and financial policies to push forward on the "marathon" to growth – or risk a prolonged global slump.
In a 14-page 'Global Policy Agenda' for the world's economic policymakers, the IMF outlined a long list of tasks that remain incomplete, from reining in shadow banking risks in China to speeding up financial reforms.
It also said it was "utterly disappointed" the US again failed to pass historic reforms.
"The key challenge remains transforming a modest and fragile recovery into more rapid, balanced and sustainable growth," the IMF said ahead of its twice-yearly meetings with the World Bank that kick off today. "This is a marathon, not a sprint."
Taking stock since the last meetings in October, the IMF saw similar risks on the table, including the chance for huge market and exchange rate volatility if the US Federal Reserve botches its exit from a huge monetary stimulus programme, withdrawing too quickly or not communicating well enough.
"Such a scenario could be especially disruptive if financial stability risks from very accommodative monetary policies, including excessive risk-taking and leverage, are left unchecked by supervisory authorities," the IMF said, echoing risks highlighted in its global financial stability report earlier this week.
The Fund said more co-ordination between central bank and financial regulators could limit exchange price swings, and said central bankers should have wider discussions of their plans. And the IMF said some major emerging market countries were calling for even more co-operation on monetary policy, as they blamed Fed policies for destabilising capital flows.
The IMF cautioned advanced economies to avoid withdrawing easy money too quickly, as the recovery is still fragile, inflation low, and countries are still struggling to crawl out from piles of debt in the wake of the global financial crisis.
It also warned emerging markets, which still contribute the bulk of global growth, could slow even more. "Geopolitical tensions that have recently come to the fore could also cloud the growth outlook," it said.