IMF warns wars, trade tensions, debt threaten global economy

The International Monetary Fund (IMF) has cautioned that wars, trade disputes, energy supply disruptions and mounting government debt continue to threaten global economic stability, despite better-than-expected resilience to recent shocks.

In a statement released after the 54th meeting of the International Monetary and Financial Committee (IMFC) in Bangkok on Saturday, the fund's policy advisory body warned that the global economy remained vulnerable to further disruptions.

The committee said geopolitical conflicts were driving up economic and humanitarian costs, with poorer nations facing a disproportionate burden. Further escalation could disrupt trade routes, push up commodity prices and deepen food and energy insecurity.

It also flagged rising government borrowing costs, high public debt and refinancing pressures as potential threats to financial stability, particularly for countries with limited access to international funding.

The committee acknowledged that advances in artificial intelligence and other technologies were attracting investment and supporting trade, but warned that uncertainty surrounding their economic and financial effects could intensify existing risks.

It urged governments to strengthen fiscal policies, maintain central bank independence and coordinate efforts to address global economic imbalances and trade tensions.

The IMFC also stressed the need for reliable energy supplies, uninterrupted international shipping routes and improved debt restructuring mechanisms for vulnerable economies.

It welcomed the Bangkok Blueprint, which aims to strengthen safeguards in digital finance, improve cybersecurity and combat online fraud.

The committee called for greater transparency from borrowers and creditors to make sovereign debt resolution more predictable.

With IANS inputs