Pakistan has not approached IMF - IMF Chief Economist

Geraldine Edwards
October 12, 2018

Ahead of the Bali gathering, the International Monetary Fund reviewed its global growth forecast down 0.2 percent to 3.7 percent for 2018 and 2019 - citing trade tensions, protectionism and rising debt levels as the main causes.

The benchmark stock index fell to the lowest in more than two years on Monday amid worries of the worsening economic crisis.

It's not just Australia feeling the bite from the $US200 billion worth of tariffs on Chines products announced last month by President Trump.

In broader terms, with the effects of the imposition and the countering of duties by the United States and China to be felt in 2019, the International Monetary Fund reduced its estimates of growth for the U.S. to about 2.5% for 2019, which again is a reduction of about 0.2% from its initial estimate of 2.7%.

Dr Obstfeld also expects Indonesia to turn in "fairly strong" growth, despite the weakening rupiah. This growth exceeds that achieved in any of the years between 2012 and 2016, he said. "The negative revisions for emerging market and developing economies are more severe, at minus 0.2 and minus 0.4 percentage point respectively for this year and next year".

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Asad Umar, Pakistan's incoming finance minister, speaks during an interview in Islamabad.

"Owing to these changes, our worldwide growth projections for both this year and next are downgraded to 3.7 per cent, 0.2 percentage point below our last assessments and the same rate achieved in 2017", the report said.

The IMF report said "protectionist rhetoric" was being "increasingly turned into action", warning that such uncertainty "could lead firms to postpone or forgo capital spending, and hence slow down growth in investment and demand".

The fund urged governments to focus on policies that could share the benefits of growth more widely, helping counter the growing mistrust of institutions and avoiding "protectionist reactions to structural change".

The fund left its 2018 United States forecast unchanged but cut its expectation for next year, citing the impact of the trade conflict.

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She declined to comment on the recent market rout, but said US equities and overall stock prices "in general have been extremely high".

The IMF, in the WEO report, said inflation pressures in sub-Saharan Africa had broadly softened, with annual inflation projected to drop to 8.6 per cent in 2018 and 8.5 per cent in 2019, from 11 per cent in 2017.

Several emerging markets had their forecasts cut, including Argentina, Brazil, Iran and Turkey, reflecting factors including tighter credit. But he said that China's involvement can create issues for Pakistan as well.

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

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