Pakistan to seek International Monetary Fund bailout to overcome financial crisis

Pakistan to start talks with IMF as rupee continues to fall

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

Maurice Obstfeld, economic counsellor and director of the research department at the International Monetary Fund (IMF) has explained that the 3.9 percent erstwhile projection of global economic growth for 2018 and 2019 taken last April is overoptimistic.

The U.S. and China have imposed higher tariffs on tens of billions of dollars' worth of products the two countries have exported to each other, with no immediate end in sight to the tit-for-tat dispute.

The trade confrontation weighs on China in particular, where growth is projected to slow to 6.6 per cent this year and 6.2 per cent in 2019, a downgrade of 0.2 points.

China has responded in kind with its own barrage of levies, rattling nerves especially among other Asian economies and already vulnerable countries like Argentina, Turkey and Brazil.

With much of the US-China tariff war's impact to be felt next year, the Fund cut its 2019 US growth forecast to 2.5 per cent from 2.7 per cent previously, while it cut China's 2019 growth forecast to 6.2 per cent from 6.4 per cent.

Although the Prime Minister has requested loans from friendly countries and promised the residents that he will recover the funds that were stolen by corrupt officials, financial help is in short supply.

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.

Jakarta expects the economy to grow by 5.2 per cent this year and 5.3 per cent next year, given external pressures.

The IMF also took aim at Brexit in its assessment, as it warned how slow progress in thrashing out an European Union divorce deal for Britain is creating "pervasive uncertainty" about future trade costs.

The near-term impact of a full-fledged trade war on growth in China will be almost double that of the United States, according to the IMF's estimates. That could result in higher-than-expected interest rates from the Federal Reserve and stock market uncertainty.

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

"Broadly speaking, we see signs of lower investment and manufacturing, coupled with weaker trade growth", Dr Obstfeld said.

"We have supported the move of China toward (currency) flexibility", she said, adding that the International Monetary Fund has encouraged Chinese authorities to "go down that path".

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.

Global trade tensions would also have a bearing on the eurozone's 2018 growth forecast, which was cut to 2 percent from 2.2 percent previously.

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