The International Monetary Fund (IMF) chief Christine Lagarde has warned that the global economy has entered a dangerous phase and risks a down ward spiral of uncertainties, financial instability and collapse in global demand.
Lagarde said the global economy was suffering from permanent "adverse feedback loops" caused when weakening financial systems and economic recession feed off of each other.
According to Economists, an "adverse feedback loop" occurs when the production of real goods and services slows down in the midst of a financial crisis.
Addressing a meeting in Beijing China on Wednesday, the IMF boss urged china to help prevent Europe’s debt crisis from spreading around the world.
Lagarde said that if timely action is not taken, states could enter a downward spiral of financial instability, and a collapse in global demand.
// Cue in: we believe that the world economy …
Cue out: … remains unacceptably high. //