Published: Fri, October 12, 2018
Money | By Ralph Mccoy

International Monetary Fund team to visit Pakistan after request for bailout loans

International Monetary Fund team to visit Pakistan after request for bailout loans

The International Monetary Fund (IMF) on Tuesday downgraded its outlook for the world economy, warning that the imposition of import tariffs between the USA and China were taking its toll on global trade.

In its latest "World Economic Outlook", (WEO) the IMF's has predicted that the global economy will grow by 3.7% in 2018, down from the 3.9% it predicted in April 2018.

According to the Bretton Woods institution's latest World Economic Outlook Report on World Economy and Financial Surveys, the economic growth will however be higher at 7.6 per cent GDP in 2019 but will gradually dip to about 5.1 per cent GDP by 2023.

The Breton Woods institution, which said this at the Annual General Meetings of the IMF/World Bank now going in Bali, Indonesia, also revised downwards growth prospects for Nigeria in 2018 from 2.1 per cent to 1.9 per cent. It is projecting a current account of -4.1 per cent of GDP in 2018, -4.0 per cent of GDP next year and-3.6 per cent of GDP.

"We need to work together to de-escalate and resolve the current trade disputes", Lagarde said at an International Monetary Fund and World Bank gathering in Bali.

Mr Milesi-Ferretti noted Nigeria's (economic) growth of about 1.9 per cent this year to rise to about 2.3 in 2019, with South African economy, now in technical recession at only 0.8 per cent growth rate this year.

Prominent US academic Jeffrey Sachs was less diplomatic in his assessment of Trump's shepherding of American trade relationships, slamming the president's repeated claims that deficits with China and other nations meant Americans were being taken advantage of.

It left 2018 growth forecasts for the two countries unchanged at 2.9 percent for the United States and 6.6 percent for China.

Some energy-rich emerging market countries have fared better due to higher oil prices, with Saudi Arabia and Russian Federation seeing forecast upgrades.

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"We have two options: first, we can go to friendly countries and ask them to bridge this gap; and second, that we go to the International Monetary Fund", he said.

Japan would see its 2019 growth rate more than halved, from 0.9% to 0.4%, under the worst case scenario.

But China's involvement could also bring potential risks, he said.

"The reason for this, according to Maurice Obstfeld, the IMF's chief economist is because, "(The) US growth will decline once parts of its fiscal stimulus go into reverse.

These included easing planning restrictions to boost housing supply, improve the quality of transport infrastructure and facilitating the relocation of workers likely to be affected by trade barriers created by Brexit.

A bull run has taken USA equities to record highs this year.

She thus urged global economies to use the current growth momentum, ("because we still have it") to implement the right policy actions in the areas earlier outlined, so as to be able to achieve the goals set out for global economic prosperity.

Already the Federal Reserve interest rates hikes are increasing pressure on emerging market economies by fueling an outflow of capital as investors seek higher returns, while increasing borrowing costs at the same time.

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