FMI: "Volatile markets and commodity prices bringing about new worries over the economy"

The global economy needs a collective boost to help it, as the volatile financial markets and low commodity prices create new worries concerning its health, says David Lipton, First Deputy Managing Director of the International Monetary Fund.

The IMF official said on March 8th, in a speech in Washington, before several American entrepreneurs, that the perils that threaten the global economy have increased after January, when the Fund cut its estimates concerning the growth of the world's economy in 2016.

In the opinion of David Lipton, a combination between the monetary and fiscal policy and structural reforms is necessary to consolidate the growth of the economy, and to protect against the various risks - from the infrastructure requirements that the US doesn't meet, to the deflation in Japan.

According to the IMF official, the economic perils that threaten Europe are the high level of government debt, the private sector balance sheets, and the non-performing loans in the banks' portfolios, respectively.

In the US, the IMF thinks that there is pressure on expenditures related to the aging of the population and on the necessary infrastructure. In Japan, the risk is represented by deflation, and on the emerging markets by the significant decline of capital expenditures and by the increase of public debt, according to the IMF.

Lipton has suggested that fears concerning the world's economy have put significant pressure on the financial markets, this year. "The indices that measure stock prices have fallen over 6% so far, which has caused the global markets to lose over 6,000 billion dollars or 8.5% of their capitalization", said Lipton, who mentioned that this amount represents almost half of the losses of 12,300 billion dollars posted at the peak of the global financial crisis.

The IMF official also warned that countries which export commodities should "acknowledge" the fact that their prices may stay at permanent low levels and should increase the efficiency of their public spending, to consolidate their fiscal institutions and to increase their revenues in other sectors.