October 8, 2018 / 3:49 PM / a month ago

Global downturn has become more likely, Germany warns

FILE PHOTO - The German central bank (Bundesbank) vice-president Claudia Buch poses during a photocall at the Bundesbank headquarters in Frankfurt, May 20, 2014. REUTERS/Ralph Orlowski

FRANKFURT (Reuters) - A global economic downturn has become “more likely”, making it urgent for governments to set cash aside, Germany’s central bank was set to tell the world’s top financial policymakers gathering in Indonesia.

Central bankers and finance ministers from across the world are due to meet in Bali this week for the annual meetings of the International Monetary Fund and the World Bank, amid heightened trade tensions between the United States and China and crises in some emerging countries.

Germany’s Bundesbank was set to tell the summit that global growth remained robust but the economic cycle was now past its peak, while risks had risen due to political uncertainty relating to trade conflicts and Brexit negotiations.

“The advanced economic cycle in Germany and internationally makes a downturn more likely,” Bundesbank vice president Claudia Buch said in a statement published on Monday.

“That reduces the window of opportunity for fiscal consolidation and for the build-up of buffers to mitigate cyclical risks in the financial system.”

Reporting By Francesco Canepa; Editing by Gareth Jones

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