IMF cautions Pakistan against increasing Chinese involvement in economy

Pakistan       by Usman Arshad | Published

The International Monetary Fund (IMF) on Monday retained economic growth projection for India at 7.3 per cent for 2018-19 (FY19), lower than the government's and the Reserve Bank of India's (RBI's) forecasts.

The IMF said a new data base in its semi-annual Fiscal Monitor report showed considerable net worth in 31 countries that account for 61 per cent of global economic output. "While Nigeria will grow from 1.9 per cent in 2018 to 2.3 percent in 2019, South Africa and Angola are projected to move from 0.8 to 1.4 and -0.1 to 3.1 per cents respectively".

The global finance agency dropped its projection for world economic growth by two-tenths of a percentage point for both 2018 and 2019 to 3.7 percent, the first time it had trimmed its economic outlook in more than two years.

The worldwide organisation said that India's growth has rebounded from "transitory shocks" such as the demonetisation of high value currency notes and the introduction of the Goods and Services Tax.

"In the United States, momentum is still strong as fiscal stimulus continues to increase, but the forecast for 2019 has been revised down due to recently announced trade measures, including the tariffs imposed on $200 billion of US imports from China", IMF report said.

This is down from its July forecast of 3.9 percent growth for both years. The 0.2 percentage point downgrade to the 2019 growth forecast is attributable to the negative effect of recent tariff actions, assumed to be partially offset by policy stimulus, it said.

The IMF announced it had reduced its outlook on the global economy to a 3.7% growth rate for this year and next, down 0.2% from what it had originally predicted in July.

"India's medium-term growth prospects remain strong at 7.75 per cent, benefiting from ongoing structural reform", it added.

"We are concerned about the downturn in economic growth", noted Jubilee USA Executive Director Eric LeCompte.

"An intensification of trade tensions and the associated further rise in policy uncertainty could dent business and financial market sentiment, trigger financial market volatility, and slow investment and trade", the report said.

The fund, in its latest World Economic Outlook report, said the country needed to implement reforms to improve policy certainty and the efficiency of state-owned companies.

Defying the Trump administration's call to cut off the Iranian economy completely, India's Oil Minister Dharmendra Pradhan said on Monday that his country would continue purchasing crude oil from the Islamic Republic, Reuters revealed. "These efforts should be supported by further reductions in subsidies and enhanced compliance with the Goods and Services Tax".

Obstfeld said the International Monetary Fund does not see a generalized pullback from emerging markets, nor contagion that will spill over to those emerging economies which have stronger economies and have thus far avoided major outflows, such as some in Asia and some oil and metals exporting countries. "Any sharp reversal for emerging markets would pose a significant threat to advanced economies", said Obstfeld.

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