Growing vulnerabilities could add to the negative shocks to the global economy, according to a report by the International Monetary Fund (IMF).

Strikes have become more likely due to high economic and geopolitical uncertainties amid ongoing military conflicts and uncertain policies of newly elected governments, according to the report published on Tuesday.

"In particular, the widening disconnect between market uncertainty and volatility raises the possibility of sudden spikes in volatility and sharp asset re-pricing, which could be amplified by vulnerabilities," the IMF's global financial stability report said. .

"The market turmoil in early August 2024 - when stock market volatility spiked in Japan and the US and global asset prices fell sharply - provided a glimpse of the violent reactions that can follow when volatility swings interact with the use of leverage from financial institutions to create non-linear market reactions and accelerate sales," the report said.

The IMF, however, noted that global economic activity has moderated and inflation has continued to slow worldwide.

While major central banks have implemented monetary easing, financial conditions have remained accommodative, emerging markets have remained resilient and asset price volatility has remained relatively low.

The financial agency warned that further increases in economic uncertainty could increase downside risks to future growth, asset prices and bank lending growth.

"For example, assuming that real global economic uncertainty jumps by an amount equal to its growth during the global financial crisis, the negative result (in particular, the 10th percentile) of the growth of global real gross domestic product one year ahead worsens with 1.2 percentage points. "Uncertainty can also cause cross-border spillover effects through trade and financial linkages," the IMF notes in the report.