The Bank for International Settlements (BIS) warned in its Annual Economic Report released on Sunday that the world economy is facing a sluggish growth prospect driven by multiple factors, and policy uncertainty is increasing volatility in financial markets.
The report highlighted the urgent need to sustain stability amid uncertainty and fragmentation while pointing out that the growing uncertainty and weakened economic ties among countries create unfavorable conditions for the world economy and financial markets to operate stably.
The outlook for global growth deteriorated amid heightened uncertainty and the fraying of long-established economic ties. Financial markets experienced significant volatility in response to frequent, unpredictable trade policy announcements, it said.
Speaking to China Media Group (CMG) in Beijing, Zhang Tao, chief representative at the BIS office for Asia and the Pacific, stressed that trade protectionism and rising debt levels are sending shockwaves across the global economy.
"Trade protectionism caused the fragmentation of supply chains, which has been sending shockwaves to the demand side. Also, a great number of countries have also been witnessing rising debt levels and in our view, many of them have reached unsustainable levels," said Zhang.
The report also called for policymakers to play an active role in maintaining global growth amid rising uncertainty.
Policymakers must act as a stabilizing force by ensuring fiscal positions are sustainable, enhancing macro-financial resilience through a level playing field across different types of financial intermediation, and prioritizing price stability, the report said.
"The BIS has pointed out that policy-making departments, including the fiscal department, should take measures to ensure fiscal conditions to return to a level that would remain sustainable over middle and long term," said Zhang.
The BIS, established in 1930 and headquartered in Basel, Switzerland, primarily works to promote international monetary and financial cooperation, as well as to provide central banks worldwide with banking services.
BIS report warns of sluggish economic growth, policy uncertainty
BIS report warns of sluggish economic growth, policy uncertainty
