International Monetary Fund downgrades SA's 2018 growth forecast to 0.8%

Devin Lawrence
October 10, 2018

They show that a burst of strong growth, fueled partly by USA tax cuts and rising demand for imports, was starting to wane.

The ongoing trade war between the USA 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). The IMF projections don't take into account Mr Trump's threat to expand the tariffs to effectively all of the more than US$500 billion in goods the United States bought from China previous year. For 2019 however, the country's 6.6 percent growth forecast tops most countries in ASEAN, closely followed by Vietnam with 6.5 percent while Indonesia is a distant third with 5.1 percent.

The International Monetary Fund has raised Russia's gross domestic product (GDP) growth forecast to 1.8 percent for next year as it cuts its global forecasts.

Given a weaker than expected performance in the first half of this year, the growth estimates for the eurozone were revised down 0.2 point to 2.0 percent in 2018.

In a report released on Tuesday, the International Monetary Fund estimated that despite positive policy tailwinds in the USA economy resulting from things like tax reform, growth will be less than previously expected next year, as a result of the trade war.

The IMF predicts that United Kingdom public borrowing will keep falling over the next few years.

"But there is no denying that the susceptibility to large global shocks has risen", Obstfeld said. "So, India is not an emerging market economy where leveraging is progressing fast", Gasper said. Overall, global growth will remain steady - about 3.7 percent this year - and exceed that of 2012-2016.

The finance ministry has not said how much money Pakistan needs but the minister, Asad Umar, said it has external debt payments of about $8 billion due by December.

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Russian Federation was among the few energy-rich emerging market countries whose growth forecasts were bumped up.

The rupiah has indeed been under strong downward pressure, especially over the last three months, as a result of monetary tightening and stronger economic growth in the U.S., which has caused higher capital outflows, and the upward trend in worldwide oil prices, which has increased Indonesia's trade deficit and consequently the current account deficit to more than 2.5 percent of gross domestic product (GDP).

Trade tensions are expected to continue although Fund officials view US-Mexico-Canada trade agreement as a positive sign.

Stick with us for the day's rolling news. "Our probability that we would attach to further bad news has gone up", Obstfeld said.

Eric LeCompte, a financial expert and executive director of Jubilee USA said: "We are seeing growing debt crises in many developing economies, at the same time, we see risky and speculative behaviour on the raise".

But additional tariffs and countermeasures "could lead to a broader tightening of financial conditions, with negative implications for the global economy and financial stability", the fund warned.

Further moves towards a trade war could "significantly harm global growth".

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