International Monetary Fund lowers SA's economic growth forecasts

PM Khan talks to media persons in Lahore. —DawnNewsTV

PM Khan talks to media persons in Lahore. —DawnNewsTV

At its annual meeting in Bali it downgraded its prediction to 3.7% from 3.9% in July.

That also followed the IMF's first downgrade to its global growth forecast since 2016.

It also slashed its outlook this year for 19 countries, including several eurozone member states and emerging markets.

The benchmark US 10-year Treasury yield climbed to its highest since May 2011 on Tuesday.

Released in Bali during the annual meeting of the International Monetary Fund and the World Bank, the IMF's flagship World Economic Outlook said its 2019 growth projection for China is lower than in April, given the latest round of U.S. tariffs on Chinese imports, as are its projections for India.

"There are clouds on the horizon".

How bad could the trade war get? The Nasdaq composite lost 0.7 percent to 7,735.95.

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 IMF's cut to its outlook was broad-based.

It said the Saudi economy, which contracted by 0.9 percent last year, is expected to grow by 2.2 percent in 2018 and 2.4 percent next year, raising previous projections by 0.5 percent.

Also on Tuesday, it projected that inflation in Nigeria would increase to 13.5 per cent next year.

The IMF projections don't take into account Trump's threat to expand the tariffs to effectively all of the more than US$500 billion in goods the USA bought from China past year.

"Nigeria's growth, 1.9 percent this year; 2.3 next year".

However, the International Monetary Fund cuts its global economic growth forecasts for 2018 and 2019, saying that trade policy tensions and the imposition of import tariffs were taking a toll on commerce while emerging markets struggle with tighter financial conditions and capital outflows.

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 these effects, which "inflict significant costs to the global economy, especially through its impact on confidence and financial conditions".

"Growth performance varies, however, across countries".

The fund cut its 2019 United States growth forecast from 2.7 per cent to 2.5 per cent, and the China growth forecast from 6.4 per cent to 6.2 per cent.

IMF's chief economist and director of research Maurice Obstfeld, told journalists that "what affects the three major economies affect the whole continent as majority of the countries relies on their trajectories".

In a press conference at the White House on Tuesday, President Trump said "China wants to make a deal and ... they're not ready yet", adding that is a reason his administration has canceled a couple of meetings with Beijing.

Wednesday warned that global growth may be significantly harmed with further escalation of trade tension, which is a result of the uneven global economic recovery that has fuelled inward-looking policies and contributed to increased policy uncertainty.

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