World faces ‘lost year’ as policymakers sleepwalk towards fresh crisis, warns IMF

The world is sleepwalking into a fresh crisis as investors start to lose faith in policymakers’ ability to revive the global economy, according to the International Monetary Fund.

In its bluntest warning to date on the costs of policy inaction, the IMF said “financial and economic stagnation” could take hold unless governments prevented a “pernicious feedback loop of fragile confidence, weaker growth, low inflation and rising debt burdens” from forming.

José Viñals, the head of the IMF’s financial stability division, said a prolonged slowdown could knock around 4pc off global output relative to current expectations over the next five years amid repeated bouts of market turmoil.

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Lowest Ever: The Baltic Dry Index Plunges To 394 As Global Trade Grinds To A Standstill

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For the first time ever, the Baltic Dry Index has fallen under 400.  As I write this article, it is sitting at 394.  To be honest, I never even imagined that it could go this low.  Back in early August, the Baltic Dry Index was sitting at 1,222, and since then it has been on a steady decline.  Of course the Baltic Dry Index crashed hard just before the great stock market crash of 2008 too, but at this point it is already lower than it was during that entire crisis.  This is just more evidence that global trade is grinding to a halt and that 2016 is going to be a “cataclysmic year” for the global economy. Continue reading