The International Monetary Fund (IMF) has now projected Pakistan's current account deficit will contract from 5.9 percent of GDP in 2018 (the worst in emerging markets) to 5.3 percent of GDP in 2019 (again the worst in EM).
China's economy could also take a hit: The IMF revised its forecast for economic growth in 2019 down to 6.2 percent, slightly lower than previous estimates and down from 6.6 percent this year.
The fund cut its 2019 USA growth forecast from 2.7 per cent to 2.5 per cent, and the China growth forecast from 6.4 per cent to 6.2 per cent.
On the eve of its annual meetings in Bali, Indonesia, the fund on Tuesday projected a global expansion of 3.7 per cent this year and next, down from the 3.9 per cent projected three months ago.
Christine Lagarde, the IMF director during her opening remarks at the 2018 IMF/World Bank annual press conference Thursday in Bali Indonesia said, economies will need stronger worldwide cooperation because the global economy is strong, but it probably is not strong enough.
Last year, China shipped goods worth $375 billion more to the USA than it took in from the United States, a figure Trump has often said he wants to curb sharply in an effort to promote American businesses.
It left 2018 growth forecasts for the two countries unchanged at 2.9 percent for the United States and 6.6 percent for China.
The IMF talked about continued capital outflows from emerging market economies and pressure on exchange rates because of monetary normalisation in the US.
Japan would see its 2019 growth rate more than halved, from 0.9% to 0.4%, under the worst case scenario.
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The UAE's economy which grew 0.8 per cent past year, will expand 2.9 and 3.7 per cent in 2018 and 2019.
Short-term risks to global financial stability have increased "modestly", the Washington-based lender said.
Renaissance Capital considers Pakistan among the three vulnerable emerging markets alongside Turkey and Argentina and one investor told them the International Monetary Fund is looking for rupee at Rs147 to a dollar - which would take it to a 13 percent discount to the long-term average rate.
"A further escalation of trade tensions, as well as rising geopolitical risks and policy uncertainty in major economies, could lead to a sudden deterioration in risk sentiment, triggering a broad-based correction in global capital markets and a sharp tightening of global financial conditions", the International Monetary Fund said.
The euro area will expand 2 per cent this year, down 0.2 point from July, as a result of weaker-than-expected growth in the first half of the year.
The IMF as usual urged emerging economies to accelerate structural reform measures to strengthen their economic fundamentals in the long term.
"Uncertainty over trade policy is prominent in the wake of U.S. actions (or threatened actions) on several fronts, the responses by its trading partners, and a general weakening of multilateral consultation on trade issues", the report said.
Conditions in Europe and other major advanced economies have also remained "relatively easy", although investors have pushed back their expectations for the European Central Bank to lift interest rates, the report said.
Pakistan is also seeking fresh loans from China, which is already heavily invested in its transport and energy sectors.