The International Monetary Fund says that high global debt is a concern and that governments should use the current strong economic growth to strengthen their individual finances.
On governments, the IMF says that “decisive action is needed now”. It argues that by improving their finances when economic performance is strong, governments will have more scope to use tax cuts or increases in public spending to combat a future downturn.
The organization blames China for much of the increase, saying the world’s largest emerging economy is alone responsible for more than 40% of the increase in global debt since 2007. However the IMF noted that developed, emerging market and low-income countries such as those in Africa and parts of Latin America all now looked vulnerable.
The IMF also came down hard on the United States and President Donald Trump’s fiscal stimulus. The Washington-based fund says Trump’s package of tax cuts and spending increases was leading to a bigger budget deficit at a time when it should be on the way down.
Despite the concerns about global debt the IMF has an overall positive outlook of the global economy.
The banking sector has become more resilient since the global financial crisis and the IMF says cryptocurrencies like bitcoin do not currently pose any risk global economic stability but still warned against their increased use.
