IMF warns about the dangers of nationalist policies in undermining global co-operation

Risks are building in the global economy, with growth supported by increasingly unsustainable policies and global co-operation undermined by nationalist policies, the IMF warned on Tuesday.

The fund’s comments came as it revised down its economic forecasts modestly for most countries for this year and next in its twice yearly World Economic Outlook. Positive features that drove economic momentum in 2017 were ebbing away and financial markets had not yet reflected the rise in threats to the world economy, the report said.

Warning that the world was now in “an environment where financial conditions could tighten suddenly and sharply,” the IMF urged countries “to advance policies and reforms — both multilaterally and at the country level — that extend the momentum and raise medium-term growth for the benefit of all, while building buffers for the next downturn”.

The fund had unusually stern words for the US, its largest shareholder, criticising the Trump administration’s imposition of tariffs and tax cuts near the top of the economic cycle and calling for both to be reversed.