International Monetary Fund cuts global economic growth target to 3.7%

  • International Monetary Fund cuts global economic growth target to 3.7%

International Monetary Fund cuts global economic growth target to 3.7%

With weakening growth and uncertainties over trade, smoothing the economic impact of structural adjustments and de-risking "is a very hard act of judgment that policymakers in China have to struggle with", Vitor Gaspar, director of the IMF's fiscal affairs department, told reporters at a separate briefing on its Fiscal Monitor, a report that tracks the state of countries' public finances.

The IMF's forecast for 2.5 percent US growth next year is the same as the Federal Reserve's prediction.

With much of the U.S.

While the banking system is stronger now, new risks have emerged, and "the resilience of the global financial system has yet to be tested", the International Monetary Fund said.

But higher U.S. interest rates have also helped send emerging market currencies into a tailspin, as countries that borrowed heavily in dollars race to pay back debt.

Asked how would the IMF react to Pakistan's request for an emergency bailout package, he said: "As with any member in good standing, they are certainly entitled to request financial support from the Fund". The IMF estimated that the global economy will grow 3.7% in 2019, down from its July projection of 3.9%, the first time since July 2016 that the fund has downgraded its global growth forecast.

The Briton Woode institution is also projecting growth of 1.9 and 0.8 percent for Nigeria and South Africa while it is predicting contraction of 0.1 percent for Angola.

In countries with "systematically important financial sectors", total non-financial debt has risen to US$167 trillion, or about 250 per cent of their combined GDP, up from US$113 trillion or 210 per cent of GDP in 2008.

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

"We will be listening very, very attentively when and if they come to us", said Obstfeld.

More broadly, given continued monetary policy normalisation in advanced economies and escalating trade tensions, policy makers in emerging-market economies should be prepared to face portfolio flow reversals, said the IMF.

The IMF notes that credit conditions in emerging markets have tightened since mid-April, driven by a stronger USA dollar, escalating trade tensions, and political and policy risks unique to individual countries.

It found that global GDP output under this scenario would fall by more than 0.8 percent in 2020 and remain roughly 0.4 percent lower in the long-term compared to levels without the effects of a trade war.

The repercussions for the United States and China would be particularly severe, with 2019 GDP losses of more than 0.9 percent in the United States and 1.6 percent in China in 2019. 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. It also assumes that Trump imposes a 25 percent tariff on imported cars and auto parts.

Trump renewed his threat to impose tariffs on $267 billion worth of additional Chinese imports if Beijing retaliates further with its own higher levies on USA products entering China.