The world economy, battered by the worst financial crisis in 80 years, is recovering but it is likely to face a bumpy road ahead with regional imbalances, high unemployment and rising prices posing major threats, the International Monetary Fund (IMF) warned on Tuesday.
“As tensions between countries increase, we could see rising protectionism — of trade and of finance. And as tensions within countries increase, we could see rising social and political instability within nations — even war,” IMF managing director Dominique Strauss-Kahn said.
While growth remains below potential in the advanced economies, emerging economies are growing much faster, he said.
“The leaders of China and India have put tackling income and wealth disparities high on their policy agendas,” he added.