ibusinesslines.com
ibusinesslines.com October 21, 2018


International Monetary Fund downgrades outlook for world economy to 3.7% growth

09 October 2018, 06:30 | Kelvin Horton

People walk past a mural on a bank showing symbols for American Chinese and other world currencies in Beijing

IMF cuts world economic growth forecasts as import tariffs emerging market issues bite

The Pakistani government has chose to approach the International Monetary Fund (IMF) for a bailout to address the mounting balance of payments crisis faced by the South Asian country, Finance Minister Asad Umar announced on Monday.

The Washington-based institution had predicted a 2019 growth rate of 1.5 percent for Russian Federation in its last update in July.

The IMF said the balance of risks was now tilted to the downside, with a higher likelihood that financial conditions will tighten further as interest rates normalize, hurting emerging markets further at a time when US -led demand growth will start to slow as some tax cuts expire.

At its annual meeting in Bali it downgraded its prediction to 3.7% from 3.9% in July.

Growth estimates for the euro area and Britain were also revised down with the report warning that growth "may have peaked in some major economies".

The IMF added interest rates would need to be increased to deal with inflation but it warned the Bank of England to be flexible so it could change depending on the situation.

And if it continues, the "escalation of trade tensions to an intensity that carries systemic risk is a distinct possibility without policy cooperation".

The value of Chinese loans given to Pakistan over the last 13 months is close to the US$6.2 billion the International Monetary Fund lent it during the last bailout, according to a Bloomberg report in August. The contract lost 0.1 percent to settle at $74.29 per barrel in NY.


"Our probability that we would attach to further bad news has gone up", Obstfeld said.

"Growth is now much more uneven" than six months ago, he told reporters. "Not only have some downside risks we identified in the last WEO been realized, the likelihood of further negative shocks to our growth forecast has risen".

In a damning forecast, the International Monetary Fund is predicting Turkey's gross domestic output will add 3.5 percent this year and only 0.4 percent in 2019.

And it stressed "cooperative solutions" to help boost continued growth in trade "remain essential to preserve and extend the global expansion".

The UK economy, meanwhile, is expected to grow 1.4 percent this year and 1.5 percent in 2019 - falling behind nearly all of Europe, with the exception of heavily-indebted Italy.

The US will also see its growth "decline" once its fiscal stimulus, delivered through wide-ranging tax cuts "goes into reverse" according to Mr Obstfeld. Authorities have devalued the rupee multiple times since December.

Adjustments would occur as domestic production displaces higher-priced imports, the model shows, but in the long run, the U.S. GDP would still be 1.0 percent below a baseline without these tariffs, while China's GDP output would be one half percent below the baseline. Alphabet, Google's parent company, fell 1 percent to $1,155.92. China was the fastest growing economy in 2017 as it was ahead of India by 0.2 percentage points.



Other News

Trending Now

Major UN report says climate change is worse than first thought
At the current rate of warming, the world as a whole will reach the 1.5° mark between 2030 and 2052, the report concludes. The most-affected areas in India will be mega cities, coastal areas, high-mountain and small-island regions.

Facebook unveils voice-controlled camera which watches you in your living room
It also shows that when it comes to using its services to collect data, Facebook's policy is "if we can't have it, no one can". When you're not using the 10-inch touch screen for calls, it displays images from Facebook, such as a shared album you choose.

Kavanaugh to attend White House event, as elections loom
The "hoax" remark is the furthest the president has gone in trying to discredit Ford and other accusers. Susan Collins announced, on Friday, October 5, that she would be voting "yes" on Brett M.

The $3 Million Crowdfunding Effort To Unseat Sen. Collins In 2020
Justice Brett Kavanaugh was sworn in Saturday night and a few hours later the debate on his confirmation resumed, with Sen. She called it "the most hard in the 22 years that I've been honored to represent the state of Maine in the Senate".

Melania Trump puts on happier face during Africa tour
While visiting the Sheldrick Wildlife Elephant Project in Kenya, the First Lady topped her outfit with a white pith helmet. During her visit to Kenya , she was also shown a pile of ash of ivory that was seized and burnt in the country recently.

Canada oil refinery EXPLOSION: Fire rips through New Brunswick factory
Saint John police said they are responding to an incident at the refinery and are asking residents to avoid the area altogether. Michael Steeves said he was driving about a kilometre away when he saw flames reach as high as 100 feet in the air.

Robertson: Title race not just between Liverpool and City
Liverpool don't play with a No 10, but there's no David Silva or Bernardo Silva or a player like that in the squad. It showed we can do both - have the ball and be very strong as well. "We were so defensively solid".