International Monetary Fund cuts global economic growth target to 3.7%

Finance Minister Asad Umar says decision is taken after consulting leading economists

Saudi Arabia, the biggest Arab economy which contracted 0.9 per cent a year ago, will expand 2.2 and 2.4 per cent in 2018 and 2019, 0.3 and 0.5 percentage points higher than the July forecast.

It predicted 2.9 percent USA growth this year, dropping to 2.5 percent next year, and to 1.8 percent in 2020, as the effect of US tax cuts wears off and the trade war with China inhibits growth.

The downward revision by the International Monetary Fund comes during the same time that the International Monetary Fund and the World Bank are going to be holding their yearly meeting in Bali, Indonesia.

"Owing to these changes, our worldwide growth projections for both this year and next are downgraded to 3.7 per cent, 0.2 percentage point below our last assessments and the same rate achieved in 2017", the report said.

The rapid build-up in debt in China in recent years also is a concern, although Chinese authorities have taken steps to rein in debt growth, he said.

Growth is projected to slow to 6.6 percent this year and 6.2 percent in 2019, a downgrade of 0.2 percentage points.

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

"It's tempting to be a bit depressed about this perspective but I'm actually hopeful because there is a clear appetite to improve and expand trade", she said.

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.

The IMF said in a statement last Thursday that Pakistan was in need of significant external financing in the short term, and recommended upping gas and power tariffs while also pushing for exchange rate "flexibility" and monetary policy tightening. So, what you do see is that emerging market economies, which is where India is, there's a very fast buildup in private debt with a slowdown in the last two years, But India is basically steady. Indonesia has been swept up in the market turmoil triggered by rising US interest rates and a stronger dollar, which has pushed the rupiah down 11 percent this year. "However, it is projected to rise to 5.1 percent in 2019", the report said.

Maurice Obstfeld, economic counsellor for the International Monetary Fund, said: 'Trade policy reflects politics, and politics remain unsettled in several countries, posing further risks.

Emerging Asia continued to register strong growth, supported by a domestic demand-led pickup in the Indian economy from a four-year-low pace of expansion in 2017, even as activity in China moderated in the second quarter in response to regulatory tightening of the property sector and non-bank financial intermediation, it said.

He called on countries to ensure inclusive growth, which he said was "more important than ever".

Trump has repeatedly touted Wall Street records as proof of the success of his economic programme including his confrontational trade strategy, and has frequently criticised the Fed for gradually raising interest rates, which could press the brakes on equity markets.

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