88620
Escalation of protectionist measures could trigger a fresh global economic downturn.
Escalation of protectionist measures could trigger a fresh global economic downturn.

BIS Urges Addressing Vulnerabilities to Keep Growth Momentum on Track

BIS Urges Addressing Vulnerabilities to Keep Growth Momentum on Track

Policymakers can maintain the current economic upswing beyond the short term by tackling structural reforms, rebuilding monetary and fiscal policy space to react to future threats and encouraging prompt implementation of regulatory reforms, the Bank for International Settlements writes in its Annual Economic Report.
In its flagship economic report, the BIS describes how the global economy is coming off a vintage year for growth with low inflation—unusual so late in the expansion. The gains are in no small measure the fruit of a decade of extraordinary monetary policies, but these have also contributed to vulnerabilities. Although the path to sustainable growth underpinned by price and financial stability is quite narrow, the right policy mix can help fend off material risks to the outlook, BIS.org reported.
“We must seize the day,” says BIS General Manager Agustin Carstens. “Addressing vulnerabilities is key to keeping the growth momentum on track. The stronger performance gives us a window to pursue necessary reforms and recalibrate policies. Let’s not miss this opportunity.”
An escalation of protectionist measures or a sudden jump in historically low bond yields in core sovereign markets could trigger a fresh downturn. Political upheavals or disappointing profits could dent investors’ appetite for risk, shaking overstretched financial markets, says the report, launched on Sunday under a new title.
These risks come against a backdrop of rising private and public debt globally and tighter links between financial and business cycles, which can amplify expansions and contractions. The latter are characterized by high debt service burdens, deleveraging and falling asset prices.
Although the specific policy mix will vary across jurisdictions, rebuilding room for policy maneuver requires taking a longer-term view of the challenges ahead. Consolidating public finances is a priority. It is essential to continue normalizing monetary policy with a steady hand while being mindful of risks. It is important to deploy macroprudential measures where financial vulnerabilities are building up. Making labor and product markets more flexible and implementing post-crisis financial regulatory reforms are also key to securing long-term growth.
The report assesses the state of the financial industry. Most banks have strengthened their balance sheets and adjusted to the newly finalized Basel III requirements. Yet improvements are not uniform and some countries’ banks are not fully healed, calling for further action. The report also highlights the greater share of credit now channeled through non-banks, such as asset managers. This can make market reactions harder to anticipate.

Short URL : https://goo.gl/juyisf
  1. https://goo.gl/Ab3NTn
  • https://goo.gl/5UFe9k
  • https://goo.gl/CVCjme
  • https://goo.gl/f2Q3EB
  • https://goo.gl/R7PSK4

You can also read ...

Capital Economics forecasts Turkey’s GDP growth will fall to 3.5% in 2018 from 7.4% in 2017.
Expectations for Turkey's end-2018 inflation rate rose from 12...
Trump Tactics Sabotaging US Economy, Markets
Wall Street could be making a costly mistake. According to...
Apple Watch Smells Losses
The latest round of US tariffs on $200 billion of Chinese...
Italian Bonds, Stocks Fall
Italian bond yields rose and equities sold off on Friday after...
File photo of finance ministers and central bankers from the G20 nations.
Global economic growth is poised to pick up this year, though...
Technology Can Help Workers From the Informality Trap
Technology and what it will do to change how people work is...
Moody’s Warns Philippines of Downside Risk
Debt watcher Moody’s Investors Service on Friday said the...
Pakistan sees 5.8% growth during FY18.
The size of Pakistan’s economy stood at $313.13 billion at the...

Add new comment

Read our comment policy before posting your viewpoints

Trending

Googleplus