Published: Sat, October 13, 2018
Worldwide | By Lisa Hogan

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

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

With US GDP growth expected to drop from 2.9 per cent this year to 1.8 per cent by 2020, the International Monetary Fund also warned about the potential risk of an "inflation surprise", fuelled by the same tax cuts and rising spending used to cushion the impact from the trade war.

Although the newly projected rate is same as last year's rate of 3.7 percent, this growth exceeds that achieved in any of the years between 2012 and 2016, and it occurs as many economies have reached or are nearing full employment and as earlier deflationary fears have dissipated.

Global trade tensions would also have a bearing on the eurozone's 2018 growth forecast, which was cut to 2 percent from 2.2 percent previously.

It's so concerned about the potential for a bad deal it has downgraded global economic growth to 3.7% for both 2018 and 2019, in its latest World Economic Outlook.

Nigeria's economy recorded slow growth in the second quarter of 2018 as oil sector contracted by 3.95%.

For China, economic growth outlook was maintained at 6.6 percent, but the International Monetary Fund shaved the growth prediction for next year to 6.2 percent, which will make it the slowest growth rate for the country since 1990.

The IMF, created in 1945, is an organization of 189 countries, working to foster global monetary cooperation, secure financial stability, facilitate worldwide trade, promote high employment and sustainable economic growth, and reduce poverty around the world.

The IMF warned of a permanent hit to growth if the US goes ahead with a threat to impose a 25 percent tariff on all imported cars.

For next year, trade is seen growing just four per cent, a half point less than the prior forecast.

If China and the United States were to resolve their trade differences, it "would be a significant upside to the forecast".

"There is no denying that the susceptibility to large global shocks has risen", the IMF's top economist Maurice Obstfeld told reporters.

"Trade policy reflects politics and politics remains unsettled in several countries, posing further risks", Obstfeld said. In September, Trump imposed tariffs on almost $200 billion of Chinese imports, with China responding with higher tariffs on about $60 billion of US imports.

The US growth forecast for 2019 is down from 2.7% to 2.5%.

The model also includes the effects of a reduction in business confidence that reduces investment and leads to a tightening of financial conditions. Angola, contracting by 0.1 percent this year.

Washington has also imposed tariffs on steel and aluminium, citing national security concerns, and has also warned it could impose a 25% levy on imported cars and auto parts.

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