The International Monetary Fund has highlighted risks of a new financial crisis, warning that global output could be cut by 4% over the next five years, a repeat of the 2008-09 recession. China's continued decline and a bitter Brexit (exit of britain from EU) battle raging in the United Kingdom, coupled with worrisome business confidence and investment figures, these developments have led the IMF to lower its 2016 GDP forecasts almost across the board.
Policies to fix global financial challenges
First, policymakers in advanced economies need to tackle crisis particularly among banks, as they play a key role in financing the economy.
Second, policymakers in emerging markets need to strenghten their resilience to global slowdown. The sharp fall in commodity prices has damaged both corporate and government sectors, leading to rise in economic and financial risks.
Third, as the health of the corporate sector deteriorates, especially in export oriented units, unemploymemt and slowdown of economy will increase.