International Monetary Fund downgrades SA's 2018 growth forecast to 0.8%

Pakistan to start talks with IMF as rupee continues to fall

Pakistan to start talks with IMF as rupee continues to fall

The report says that outflows could hit $100bn (£76.4bn) over a year, about 0.6% of emerging market economies' gross national income.

"New vulnerabilities have emerged and the resilience of the global financial system has yet to be tested", it said in the twice-yearly Global Financial Stability Report.

"Across emerging market and developing economies, activity continued to improve gradually in energy exporters", the International Monetary Fund said.

In addition to the trade barriers, the International Monetary Fund said higher interest rates are also contributing to slowed economic growth.

Couple of days ago, IMF chief economist Maurice Obstfeld said that the fund has not been formally approached by Pakistan for financial assistance, and the country's cooperation with China has both financial benefits and risks.

The report also amplified worries about global trade, echoing numerous earlier IMF statements, but noted that trade tensions have thus far affected individual sectors more directly than the financial system.

The IMF expects the U.S. economy to continue growing this year at 2.9%, but sees that rate falling to 2.5% next year amid the country's escalating trade war with China.

If projections are true, then India would regain the tag of fastest growing major economies of the world, crossing China with more than 0.7 percentage point in 2018 and an impressive 1.2 percentage point growth lead in 2019.

That puts pressure on emerging market economies such as Turkey and Argentina, which have large amounts of debt which concerns investors.

Prominent U.S. academic Jeffrey Sachs was less diplomatic in his assessment of Trump's shepherding of American trade relationships, slamming the president's repeated claims that deficits with China and other nations meant Americans were being taken advantage of. These policies have contributed to a slowdown in economic growth, which is happening just as trade tensions with the USA are starting to bite. "We look forward to our continuing partnership", it added.

"We are all deeply concerned about this news and the potential impact on the business".

The head of the World Trade Organization warned that a "full-blown commercial war" could shrink global trade by almost 18 percent and also knock worldwide GDP, hurting the United States, China, and others.

The effects on the USA and China would be particularly severe, with 2019 GDP losses of more than 0.9% in the United States and 1.6% in China in 2019.

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

It also assumes that Trump imposes a 25% tariff on imported cars and auto parts imports. The government has already hiked gas tariff on average by 35 percent and more could follow.

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