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

Cornelia Mascio
Ottobre 12, 2018

The IMF's World Economic Outlook report, unveiled on the eve of its upcoming summit in Bali, Indonesia, estimated that global growth in 2018 would reach 3.7 percent, the same as the previous year but lower than the 3.9 percent it had forecast earlier this year.

The body now expects the US economy to grow at a rate of 2.5 percent in 2019, a 0.2 percentage point decline from its April estimates.

The rapid build-up in debt in China in recent years also is a concern, although Chinese authorities have taken steps to rein in debt growth, he said. Nigeria's growth is projected to increase from 0.8 per cent in 2017 to 1.9 per cent in 2018 and 2.3 per cent in 2019 (0.4 percentage point higher than in the April 2018 WEO for 2019), buoyed by the impact of recovering oil production and prices.

Finance ministers and central bankers from numerous IMF's 189 member nations are meeting in Bali this week with talk of rising protectionism taking center stage. "We do have instruments to actually measure the external-sector situation, and we hope that the recommendations that we have given to China, in terms of letting the currency fluctuate, will continue to be approved and agreed and implemented by China". The Trump administration has penalized almost half of all imports from China and has threatened more for the other half.

When the world´s two biggest economies - the U.S. and China - are "at odds", that is going to create "a situation where everyone is going to suffer", Obstfeld said.

Global trade is projected to expand by 4.2 percent this year - 0.6 percent less than expected in July - dropping to 4 percent next year.

The Breton Woods institution, which said this at the Annual General Meetings of the IMF/World Bank now going in Bali, Indonesia, also revised downwards growth prospects for Nigeria in 2018 from 2.1 per cent to 1.9 per cent. "This is the United States trying stop China's growth - it's a bad idea", Sachs, director of the Center for Sustainable Development at Columbia University, told a seminar in Bali.

Some energy-rich emerging market countries have fared better due to higher oil prices, with Saudi Arabia and Russian Federation seeing forecast upgrades.

Furthermore, the International Monetary Fund also scaled back its previous forecasts for both national economies, saying United States growth start to slow once its fiscal stimulus stops.

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 normalization of monetary policy in the United States as well as a stronger dollar and escalation in trade tensions has already begun to affect emerging market economies, the Fund said.

Higher trade barriers also slow the spread of technology and lower productivity and welfare in many countries, the International Monetary Fund said.

It sees the unemployment rate dropping to 3.9 percent in 2018 and to 3.5 percent in 2019.

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