International Monetary Fund slashes global growth forecasts

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US / China trade war and Brexit threaten global growth says IMF

13 October, 2018

The IMF said it was now predicting 3.7 percent global growth in both 2018 and 2019.

China's economy could also take a hit: The IMF revised its forecast for economic growth in 2019 down to 6.2 percent, slightly lower than previous estimates and down from 6.6 percent this year.

The ongoing trade war between the US and China could start having material effects on the economies of both countries within the coming years, according to new projections from the International Monetary Fund (IMF).

Mr Milesi-Ferretti noted Nigeria's (economic) growth of about 1.9 per cent this year to rise to about 2.3 in 2019, with South African economy, now in technical recession at only 0.8 per cent growth rate this year.

US President Donald Trump has accused China of deliberately manipulating its currency to gain a trade advantage, claims Beijing consistently rejected.

"The Prime Minister after consulting all the leading economists, today made a decision to begin talks with IMF", Finance Minister Asad Umar said in a video, posted on Facebook and Twitter.

The UK economy, meanwhile, is expected to grow 1.4 percent this year and 1.5 percent in 2019 - falling behind nearly all of Europe, with the exception of heavily-indebted Italy.

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Weaker performances by eurozone countries were also to blame for cutting global growth forecasts, the International Monetary Fund said. Obstfeld, who retires from the Fund later this year, said there were bright spots with some Latin American and African nations getting growth forecast upgrades.

The UK economy is expected to grow by 1.4 percent this year - down from April's prediction of 1.6 percent - while predicted growth for 2019 remains at 1.5 percent, a slowdown from 1.7 percent in 2017. Not only have some downside risks that the last World Economic Outlook identified been realised, the likelihood of further negative shocks to our growth forecast has risen.

Even though Indonesia is not included in the International Monetary Fund list of most vulnerable economies (Argentina, Brazil, South Africa and Turkey), as its economic fundamentals and its financial sector stability are now much stronger than during the 1998 Asian economic crisis and the 2008 global financial crisis, it is by no means a time for complacency.

Many emerging economies, he noted, are managing relatively well — given the common tightening they face — using established monetary frameworks based on exchange rate flexibility.

On-going concerns over Brexit negotiations and potential trade-wars involving the U.S., as well as an overall slower than expected growth within the European Union are cited as the main reasons for the more negative global calculations.

The trade deficit has gone up 8.6 percent this year to $31 billion.

For the eurozone, slow growth means less reductions in high unemployment rates in several countries and difficulty keeping on top of high debt levels, while Japan needs growth to ward off unsafe deflation.

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