Asian markets close lower amid IMF’s global growth forecast downgrade

Glen Norman
Октября 13, 2018

The IMF expects that Russia's growth will reach 1.8 percent in 2019, according to the World Economic Outlook report released on Tuesday.

The exercise assumes that US President Donald Trump imposes tariffs on the remaining $267 billion worth of Chinese goods imports not already under punitive tariffs and China retaliates in kind.

In Nigeria, he said inflation rate is projected to drop to about 12.4 per cent in 2018, from 16.5 per cent in 2017, before rising to 13.5 per cent in 2019.

In addition, US tariffs on China will disrupt established supply chains, especially if met by retaliation, according to the International Monetary Fund. 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.

At a meeting on the Indonesian island of Bali, the International Monetary Fund painted a cautious picture for the near future, saying that trade tensions and rising debt levels could dent China and the USA, and leave developing economies especially vulnerable to sudden stresses.

The organisation added that the ongoing Brexit negotiations had also created "pervasive uncertainty" about future trade costs.

He further stated that growth in the United States, buoyed by a pro-cyclical fiscal package, continues at a robust pace and is driving USA interest rates higher, but US growth will decline once parts of its fiscal stimulus go into reverse.

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A recent report by the IMF revealed that tighter monetary policy and moderation in food price increases contributed to tapering inflation in Nigeria.

Analysts say Pakistan is seeking $8 billion in loans in order to address a rapidly growing balance of payments crisis.

"Today's growth headwinds, from financial market tightening to trade tensions, could persist for some time", he told a briefing on the report.

"An increase in trade barriers would disrupt global supply chains, which have become an integral part of production processes in the past decades, and slow the spread of new technologies, ultimately lowering global productivity and welfare".

Existing, proposed and new retaliatory tariffs could cause maximum gross domestic product (GDP) losses of 1.6% in China and close to 1% in the USA, it said.

But the United States tax cuts and rising spending that have boosted growth, helping compensate for the impact of the growing trade conflict, could spark a sudden "inflation surprise", and in turn lead to faster-than-expected rise in U.S. interest rates, according to the fund.

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

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