WASHINGTON, April 19 (Xinhua) -- The International Monetary Fund (IMF) said Wednesday that global financial stability has continued to improve since October last year, but warned that risks in highly-leveraged U.S. corporate sectors are looming.
"New threats to financial stability are emerging from elevated political and policy uncertainty around the globe," said the IMF in its latest Global Financial Stability Report.
If the anticipated tax reforms and deregulation in the United States fail to deliver more growth than expected, risk premiums and volatility could rise sharply, undermining financial stability, said the IMF.
According to the report, overall corporate leverage in the United States is elevated, leaving some segments vulnerable to higher financing costs.
It pointed out that cash-constrained sectors, such as energy, real estate and utilities, may be challenged to expand investment without resorting to further debt financing, despite the expected tax cuts.
The IMF also warned that high leverage combined with tighter borrowing conditions could affect financial stability in the United States.
Protectionist policies could trigger capital outflows from emerging market economies and hurt growth prospects, said the IMF.
It called for policymakers to adjust the policy mix to deliver a stronger path for long-term and inclusive growth while avoiding inward-looking policies.
