International Monetary Fund revises global growth projection downward to 3.7%, says earlier numbers overoptimistic

Devin Lawrence
October 13, 2018

The International Monetary Fund (IMF) on Tuesday downgraded its outlook for the world economy, warning that the imposition of import tariffs between the USA and China were taking its toll on global trade.

US President Donald Trump recently sanctioned tariffs on an additional United States dollars 200 billion worth of Chinese goods, nearly 15 per cent of China's total exports to the US.

Dr Obstfeld said financial markets have overly emphasised short-term movements in China's currency, adding that the yuan has often recovered quickly from periods of volatility in recent years.

International Monetary Fund Managing Director Christine Lagarde on Thursday warned countries against engaging in trade and currency wars that hurt global growth and imperil "innocent bystanders".

The United States and China - the world's two biggest economies - are sparring over Beijing's aggressive effort to challenge American technological dominance.

The growth in Latin America and the Caribbean as a region are expected to diminish by 0.4 percent, so 2018 will only see an increase of 1.2 percent and by 2.2 in 2019. "Not only have some downside risks that the last WEO identified been realized, the likelihood of further negative shocks to our growth forecast has risen", Obstfeld said. In 2017, India had recorded a 6.7 per cent growth rate.

The fund, releasing its latest outlook on the global economy, reduced its forecast for Australian economic growth through 2019 by 0.3 percentage points from its April prediction.

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But on Monday, he decided his finance minister should meet with officials at this week's annual conference of the International Monetary Fund and the World Bank in Bali, Indonesia, to discuss a potential package, the finance ministry said in a statement.

It added that uncertainty in the run-up to the 2019 general election was also negatively impacting growth.

It also said interest rates would need to rise to curb inflation, but urged the Bank of England to remain "flexible" depending on what happens with Brexit.

The worldwide organization also estimates that over the medium-term, growth in China is expected to slow to 5.6 percent, "as the economy continues to make the transition to a more sustainable growth path with continued financial de-risking and environmental controls", the report said.

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IMF-WB meetings organizing committee Susiwijono, who is also secretary to the Coordinating Economic Minister, stressed that the government had anticipatory measures in place for managing natural disasters in coordination with relevant institutions like the Bali Police and the National Disaster Mitigation Agency (BNPB).

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