Trade tensions will trim global growth, says International Monetary Fund

Cornelia Mascio
Ottobre 10, 2018

The growth rate of United States for 2018 is 2.9 per cent and that of 2019 has been powered to 2.5 per cent. Not only have some downside risks that the WEO identified been realised, the likelihood of further negative shocks to our growth forecast has risen.

In a new simulation exercise to show trade war risks to the global economy, the International Monetary Fund modeled the effect of an all-out U.S.

Infrastructure needs: Pakistan needs more infrastructure development, Obstfeld added, and the country could benefit from China's role in supporting its project financing.

International Monetary Fund chief economist Maurice Obstfeld said in a statement that, although emerging markets had not yet seen a generalized pullback of capital, "there is no denying that the susceptibility to large global shocks has risen".

It kept the 7.3 per cent growth projection for this year made in July.

Output could fall by more than 1.6 per cent in China and over 0.9 per cent in the U.S. next year, according to the IMF's models.

According to sources, IMF's determination was to the contrary and they wanted the rupee to be traded above Rs 145 to a dollar.

According to the National Bureau of Statistics (NBS), the inflation rate in Nigeria rose to 11.23% year-on-year in August 2018, which is 0.09% higher than the recorded rate in July (11.14%).

Most recently, China announced new trade tariffs on $60bn of US goods, including products such as liquefied natural gas, produced in states loyal to the US President Donald Trump. In September, Trump imposed tariffs on almost $200 billion of Chinese imports, with China responding with higher tariffs on about $60 billion of USA imports. -China tariff war's impact to be felt next year, the fund cut its 2019 USA growth forecast to 2.5 percent from 2.7 percent, while it cut China's 2019 growth forecast to 6.2 percent from 6.4 percent. The S&P 500 index edged 0.1 percent lower to 2,884.43, while the Dow Jones Industrial Average gained 0.2 percent to 26,486.78. Its forecast for China's 2018 GDP growth remains unchanged at 6.6%, while revised downward by 0.2 percentage points for 2019 to 6.2%.

Downgrades to global growth also reflected predictions of a slower expansion in the eurozone as well as turbulence in a number of emerging market economies.

On monetary policy, the IMF said it should be tightened to anchor expectations where inflation is expected to pick up, say in India.

He called on countries to ensure inclusive growth, which he said was "more important than ever".

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

The IMF as usual urged emerging economies to accelerate structural reform measures to strengthen their economic fundamentals in the long term. Overall, global growth will remain steady - about 3.7 percent this year - and exceed that of 2012-2016.

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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