International Monetary Fund says Pakistan has not asked it for a bailout so far

Gladys Abbott
October 12, 2018

It was the first downgrade since July 2016.

Mounting trade tensions and stresses in emerging markets are starting to take a toll on the world economy.

The IMF expects the US economy to grow 2.9 percent this year, the fastest pace since 2005 and unchanged from the July forecast.

"Downside risks to global growth have risen in the past six months and the potential for upside surprises has receded", the International Monetary Fund said.

"There are clouds on the horizon", he said.

Global growth is expected to remain steady at 3.7 per cent in 2020, as the decline in advanced economy growth with the unwinding of the United States fiscal stimulus and the fading of the favorable spillovers from USA demand to trading partners is offset by a pickup in emerging market and developing economy growth.

The IMF said Tuesday it projects continued growth in the United States, but at a slower pace next year.

Much of the global angst has been dominated by Trump's escalating tariff war with China and his disdain for world trading norms.

It stressed that "cooperative solutions" to boost continued growth in trade "remain essential to preserve and extend the global expansion".

It said that the composition of spending and revenues should be growth friendly and protect the most vulnerable.

The IMF's cut to its outlook was broad-based.

More news: Giants Waive Ereck Flowers

The IMF said in an update to its World Economic Outlook it was now predicting 3.7 percent global growth in both 2018 and 2019, down from its July forecast of 3.9 percent growth for both years.

Last month, Washington imposed a 10% tariff on around $200bn worth of Chinese imports with President Donald Trump threatening to increase this to 25% by the start of next year if no solution was found. Beijing retaliated with an additional $60bn of imports.

Last year, China shipped goods worth $375 billion more to the USA than it took in from the United States, a figure Trump has often said he wants to curb sharply in an effort to promote American businesses.

The IMF expects the USA economy to grow by 2.9 per cent and China's by 6.6 per cent this year.

Earlier, the Asian Development Bank (ADB) announced that it will provide $7.1 billion in financing to help Pakistan achieve inclusive and sustainable growth over the next three years.

Several emerging markets had their forecasts cut, including Argentina, Brazil, Iran and Turkey, reflecting factors including tighter credit.

Pakistan's central bank issued a statement on October 9 saying the plunge in the rupee was due in part to rising oil prices, which have hiked the cost of imported oil and thus are putting pressure on Pakistan's large trade deficit.

"Growth performance varies, however, across countries".

IMF's forecasts for Hong Kong's economic outlook are mixed: it raises its forecast for 2018 by 0.2 percentage points to 3.8%, while cutting its forecast for 2019 by 0.3 percentage points to 2.9%.

Over the longer term, the International Monetary Fund sees ageing populations and sluggish productivity growth as a major challenge to advanced economies. They said the world organisation will also ask Islamabad to expand tax net in the country.

Other reports by LeisureTravelAid

Discuss This Article

FOLLOW OUR NEWSPAPER