The Fund now expects the global economy to contract by 3% this year due to the coronavirus pandemic.
Accommodative monetary stimulus has encouraged financial risk-taking, leading to “worrisome” levels of debt with poor credit quality, the Fund says.
“Further escalation of trade tensions and associated increases in policy uncertainty" could result in lower-than-expected growth next year, the IMF says.
The self-confessed economic outsider faces the challenge of helping stimulate the eurozone economy amid mounting fears of recession.
The positive industrial numbers support the notion that the U.S. economy grew at a robust pace in the April-to-June period.
The IMF urges countries to "build fiscal buffers now by reducing government deficits and putting debt on a steady downward path."
However, its projection for economic growth in the United States this year remains modest, at 2.2%.
In its latest economic outlook, the fund warns that protectionist policies "threaten global economic integration and the cooperative global economic order."
Deutsche Bank 'is one of the most important net contributors to systemic risks in the global banking system,' the IMF said.
'Accommodative monetary policy remains essential where inflation is still well below central banks’ targets,' said the IMF.
Emerging economies and bond markets need to prepare for an increase in corporate failures, says the IMF.
The IMF's Christine LaGarde welcomes confirmation that a $505 million payment would beat Greece's debt deadline.
