Published: Sat, October 13, 2018
Global Media | By Derrick Guzman

International Monetary Fund warns of looming risks to global economy

International Monetary Fund warns of looming risks to global economy

In its latest "World Economic Outlook", (WEO) the IMF's has predicted that the global economy will grow by 3.7% in 2018, down from the 3.9% it predicted in April 2018.

The IMF expects a 2.9 percent growth outlook on the USA economy, but thinks growth will shrink to 2.5 percent for 2019, attributing to the slowdown to the country's escalating trade war with China.

It predicted 2.9 percent US growth this year, dropping to 2.5 percent next year, and to 1.8 percent in 2020, as the effect of USA tax cuts wears off and the trade war with China inhibits growth. On Tuesday, the International Monetary Fund lowered its 2019 growth projection for China to 6.2% from 6.4%, although it kept its forecast for 2018's growth the same, at 6.6%.

In a report released ahead of the IMF's annual conference, this year held on the Indonesian island of Bali, the fund said that the UK's "pace of fiscal consolidation can be eased if risks materialize and growth slows sharply".

IMF's forecast for Singapore's economic outlook remains steady at 2.9% for 2018, but has been revised downward by 0.2 percentage points to 2.5% for the following year.

"Notwithstanding the present demand momentum, we have downgraded our 2019 United States growth forecast owing to the recently enacted tariffs on a wide range of imports from China and China's retaliation".

Growth of less than five percent would be unprecedented for China since it began its economic reforms in the 1970s, and complicate its efforts to move towards a more balanced economy with a greater role for services.

Finance Minister Asad Umar says the main goal of the talks with the International Monetary Fund will be a "stabilisation recovery programme" to control the country's economic crisis. South Africa, only 0.8% this year.

The IMF said that global growth rates have hit a plateau at 3.7%, and would continue to remain at this level in 2019-'20.

It said trade tensions between the USA and China, which has led the countries to implement tarriffs against each other, had played a role in the tempered global expectations. But she said that the International Monetary Fund will meet the Pakistani delegation on Thursday and that the International Monetary Fund was "available to its entire membership".

The Fed's rate hikes have already piled pressure on emerging market economies, increasing the risk of capital outflows as investors seek higher returns.

The 0.2 percentage point downgrade to the 2019 growth forecast is attributable to the negative effect of recent tariff actions, assumed to be partially offset by policy stimulus, it said.

"The fast rise in global oil prices, normalization of USA monetary policy, and tightening financial conditions for emerging markets are adding to this hard picture".

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