International Monetary Fund predicts 7.3% growth rate for India in current fiscal year

Pakistan       by Usman Arshad | Published

Pakistan by Usman Arshad | Published

The IMF in its World Economic Outlook 2018 noted that "Nigeria's projected economic growth in the sub-Sahara Africa from 3.1 percent this year to 3.8 percent in 2019 is not enough to create the needed jobs for the growing population of the region".

The International Monetary Fund has warned a trade war between the USA and China risks making the world a "poorer and more unsafe place" in its latest assessment of the global economy.

The UK economy is expected to grow by 1.4% this year - down from April's prediction of 1.6% - while predicted growth for 2019 remains at 1.5%, a slowdown from 1.7% in 2017. Bond markets were closed, leading USA indexes to a mixed finish after a day of light trading. But the fund lowered China's economic outlook for 2019 to 6.2 per cent, which would be the country's slowest growth since 1990.

The Eurozone's 2018 growth forecast was cut to 2.0 percent from 2.2 percent previously, with Germany particularly hard hit by a drop in manufacturing orders and trade volumes.

"But there is no denying that the susceptibility to large global shocks has risen", Obstfeld said.

The UK economy, meanwhile, is expected to grow 1.4 percent this year and 1.5 percent in 2019 - falling behind nearly all of Europe, with the exception of heavily-indebted Italy.

The US growth forecast for 2019 is down from 2.7% to 2.5%. Inflation forecast for 2018 was 15 percent and for 2019 16.7 percent. The Shanghai Composite index recovered from early losses to gain 0.1 percent to 2,719.41, after tumbling 3.7 percent on Monday.

In its World Economic Outlook (WEO), the International Monetary Fund said foreign exchange interventions should be limited to address disorderly market conditions, something which RBI Governor Urjit Patel also talked about.

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Some energy-rich emerging market countries have fared better due to higher oil prices, with Saudi Arabia and Russian Federation seeing forecast upgrades.

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

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

"We'll be listening very attentively when and if they come to us", Obstfeld said. Local news reports from Pakistan suggest that the currency was intentionally weakened to fall in line with the strict conditions laid down by the International Monetary Fund.

SBP spokesman Abid Qamar told Reuters "the market is aware about the overall macroeconomic conditions and based on those conditions, they are having their own expectations about the exchange rate, so that is driving (the rupee valuations) now".

Nonetheless, despite trade tensions and continued monetary policy normalisation in a few advanced economies, global financial markets have remained buoyant and appeared complacent about the risk of a sudden, sharp tightening in financial conditions, the world body said.

The current account deficit widened 43 percent to $18 billion in the year that ended June 30, while the fiscal deficit ballooned to 6.6 percent. It also assumes that Trump imposes a 25 percent tariff on imported cars and auto parts imports.

USA tariffs on $200bn of Chinese imports came into effect last month.

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