Published: Wed, October 10, 2018
Markets | By Otis Pena

International Monetary Fund says Pakistan has not asked it for a bailout so far

International Monetary Fund says Pakistan has not asked it for a bailout so far

India's medium-term growth prospects remain strong at 7.75 per cent, benefiting from ongoing structural reform, but have been marked down by just under 0.5 percentage point relative to the April 2018 WEO, it said.

Released in Bali during the annual meeting of the International Monetary Fund and the World Bank, the IMF's flagship World Economic Outlook said its 2019 growth projection for China is lower than in April, given the latest round of USA tariffs on Chinese imports, as are its projections for India.

The new projection is a marginal reduction of the 3.9 per cent projection of last April's World Economic Outlook report.

After consulting with "leading economists", Pakistan will formally approach the International Monetary Fund for support and Finance Minister Asad Umar will hold talks with officials during the lender's annual meetings in Bali this week, the Finance Ministry said in a statement late Monday.

Brazil will see a 0.4 percentage-point drop in GDP growth to 1.4 percent for 2018 as a nationwide truckers strike paralyzed much of the economy. German growth was revised down to 1.9 percent in both 2018 and 2019 due to a slowdown in exports and industrial production.

Maurice Obstfeld, IMF's chief economist and director of research said whatever affects the three major economies will affect the whole region as majority of the countries relies on their trajectories.

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President Muhammadu Buhari has again asked National Assembly to approve his plans to take another $2.868 billion Eurobond to fund 2018 budget.

Trump has led the escalating trade war because of what he believes are bad policies he said have created an $800 billion USA trade deficit. "Any sharp reversal for emerging markets would pose a significant threat to advanced economies", he added.

Most of the "meagre gains" from growth have gone to the well-off, fuelling support for protectionism and anti-establishment leaders, said Mr Obstfeld.

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

"Iran and Russian Federation, both faced with U.S. sanctions, have devised plans to increase trade interaction and ease mercantile regulations", Iran's state-run Tasnim News Agency added. "Our probability that we would attach to further bad news has gone up", Obstfeld said. Global growth will slow to 3.6 per cent by 2022-2023, as growth in rich nations falls back to potential, it said.

The IMF's analysis suggests that there is a 5 per cent probability, emerging market economies (excluding China) could face debt portfolio outflows of US$100 billion or more over a period of four quarters (equivalent to 0.6 per cent of their combined GDP), broadly similar in magnitude to the Global Financial Crisis. 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 U.S. bought from China past year. It also assumes that Trump imposes a 25 percent tariff on imported cars and auto parts.

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