IMF warns of risks in US leveraged corporate sector

Added On April 21, 2017

The International Monetary Fund says that global financial stability has continued to improve since last October. 
However, it warns that a highly-leveraged U.S. corporate sector, could pose a risk in the next couple of years.
In its latest Global Financial Stability Report, the IMF says that political uncertainity is threatening financial stability.
It also says that if the anticipated tax reforms and deregulation in U.S. fail to deliver growth as expected, then risk premiums and volatility could rise sharply.
According to the report, overall corporate leverage in the U.S. is elevated, leaving some segments vulnerable to higher financing costs.
The IMF points out a number of cash-constrained sectors, including energy, real estate, and utilities. It says they may have to turn to even more borrowing if they want to expand.
The IMF also warned protectionist policies could trigger capital outflows from emerging market economies and hurt growth prospects.
It called on policymakers to adjust their policy mix, and deliver a stronger path for long-term and inclusive growth, and avoid inward-looking policies.