Downside risks to global economic growth up: Report

The global economic growth outlook remained positive, yet the divergence between countries widened and the downside risks to economic growth increased, according to the Turkish Central Bank (CBRT) on Friday.

In its 27th volume of financial stability report, the bank focused on the increasing uncertainties over global economic policies and decreasing risk appetite in financial markets.

The bank has been publishing its financial stability report twice a year -- in May and November -- since 2005 to focus on the global and domestic macroeconomic outlook along with the most recent developments.

"Market volatilities in and perceptions of uncertainty over emerging market economies [EMEs] remained high, which resulted in net portfolio outflows, depreciation of local currencies and a rise in international borrowing costs in these countries," the report read.

"The appreciation of the U.S. dollar has negatively affected the EMEs, particularly those with high foreign exchange indebtedness," it said.

Pointing to concerns over Italian public indebtedness and the Brexit process, the CBRT stated that leading economic indicators for the euro area signal a loss of momentum in economic growth.

"The acceleration in the U.S. economic activity continued with support from expansionary fiscal policies, as protectionist trade measures pose a downside risk on expectations," it said.

As the primary risk factors, the bank listed following subjects: the high level of global indebtedness, the likelihood of the proliferation of U.S.-led protectionism, the persistence of the tightening in financial conditions, geopolitical developments and country-specific risks as well as the deceleration in global economic activity.

"Timely completion, full implementation and impact analysis of financial regulatory reforms are crucial for maintaining global financial stability," the bank added.