CBC News by Jonathon Gatehouse December 11
The International Monetary Fund is warning that another global recession looms on the horizon, even as governments and global institutions remain woefully under prepared for the next financial crisis.
In a speech delivered in London this morning , David Lipton, the IMF’s deputy director, told an audience that two years of lobbying governments to “fix the roof while the sun shines” has met with limited success.
IMF first deputy managing director David Lipton, seen here at the 2018 spring meeting of the International Monetary Fund and World Bank Group at IMF Headquarters in Washington, warned Tuesday that another global recession is looking increasingly likely. (Saul Loeb/AFP/Getty Images)
The gathering economic storm
“Like many of you, I see storm clouds building, and fear the work on crisis prevention is incomplete,” he said.
Lipton, the No. 2 to IMF head Christine Lagarde, said there is a pressing need to work towards limiting the next, inevitable downturn to a “garden variety recession,” as the risks of another 2008-style global meltdown remain high.
But world leaders have fewer tools in their emergency kits than they did a decade ago, he said, after years of deficit spending and soaring national debt levels.
“We should not expect governments to end up with the ample space to res
pond to a downturn that they had 10 years ago,” said Lipton. He added that ” enduring public resentments” might make the sort of corporate bailouts and stimulus packages that limited the damage of the Great Recession a much harder sell the next time around.
“The point is that national policy options and public financial resources may be much more constrained than in the past,” he said.