Fix trade, don't destroy it, International Monetary Fund chief Christine Lagarde warns

Fix trade, don't destroy it, International Monetary Fund chief Christine Lagarde warns

Fix trade, don't destroy it, International Monetary Fund chief Christine Lagarde warns

It left 2018 growth forecasts for the two countries unchanged at 2.9 percent for the US and 6.6 percent for China.

"It's tempting to be a bit depressed about this perspective but I'm actually hopeful because there is a clear appetite to improve and expand trade", she said. "Any sharp reversal for emerging markets would pose a significant threat to advanced economies, as emerging market and developing economies make up about 40% of world GDP".

The World Bank last week cut SA's GDP growth estimate for 2018 to 1% this year from 1.4%, while the SA Reserve Bank slashed its forecast to 0.7% from 1.2% in September.

Emerging Asia continued to register strong growth, supported by a domestic demand-led pickup in the Indian economy from a four-year-low pace of expansion in 2017, even as activity in China moderated in the second quarter in response to regulatory tightening of the property sector and non-bank financial intermediation, it said.

The IMF said the high downside risks in the medium-term are driven by relatively elevated United States interest rates, a strong USA dollar and a strong global risk appetite, which "tends to boost portfolio flows in the near term but foreshadows weaker inflows in the medium term".

After consulting with "leading economists", Pakistan will formally approach the International Monetary Fund for support and Finance Minister Asad Umar will hold talks with officials during the lender's annual meetings in Bali this week, the Finance Ministry said in a statement late Monday.

But it predicts that US growth will slow to 2.5 percent next year as the effect of recent tax cuts wears off and as President Donald Trump's trade war with China takes a toll.

Growth in the 19-nation zone is forecast to slow further to 1.9 percent in 2019, unchanged from the July estimate.

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.

US First Lady Melania Trump Visits Children's Home, Elephant Nursery in Nairobi
Her first-ever visit to Africa is also her first extended solo worldwide trip as first lady in what some see as "fence-mending". Another sign read, "69 Days Past the Deadline to Reunite Families", in reference to Trump's zero-tolerance immigration policy.

"Owing to these changes, our worldwide growth projections for both this year and next are downgraded to 3.7 per cent, 0.2 percentage point below our last assessments and the same rate achieved in 2017", the report said.

But China's involvement could also bring potential risks, he said.

Trade tensions are expected to continue although Fund officials view US-Mexico-Canada trade agreement as a positive sign. Trump has justified the higher USA tariffs as a response to the trade imbalance between the two countries, and China has swiftly responded with higher levies on US imports.

On Tuesday, the International Monetary Fund said that it would listen to Pakistan's request for financial support "very, very attentively", as it did with any member with good standing.

The Economic Counsellor and Director of Research Department at the IMF, Maurice Obstfeld disclosed the Fund's new projection for global economic growth.

The effects on the U.S. 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.

Much of the global angst has been dominated by Trump's escalating tariff war with China and his disdain for world trading norms.

It also assumes that Trump imposes a 25% tariff on imported cars and auto parts imports.

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