International Monetary Fund cuts global economic growth target to 3.7%

A worker takes a break from his work during a power cut at a workshop on the outskirts of Peshawar

A worker takes a break from his work during a power cut at a workshop on the outskirts of Peshawar

"Should market participants start pricing in the possibility of protracted trade tensions, financial conditions could tighten significantly, increasing the tail risk to global growth and financial stability", according to Global Financial Stability Report issued by the International Monetary Fund at its annual meetings in Bali.

Lagarde told reporters the Fed's rate hikes were justified by fundamentals.

"We are seeing a growing debt crisis in many developing economies", stated LeCompte who also serves on United Nation expert groups that focuses on economic issues. With record exports to China, the United States of America and Germany all helping grow the overall value of Swiss exports by 4.8 billion Swiss francs (€4.1 billion) since the first quarter of 2017.

Lagarde also touched on the economic situation in eurozone member Italy, warning Rome that it was well-advised to abide by European Union fiscal rules and adhere to the bloc's financial stability regulations amid concerns that the country's 2019 budget could exacerbate financial problems.

"De-escalate, fix the system, and don't break it", she said.

But additional tariffs and countermeasures "could lead to a broader tightening of financial conditions, with negative implications for the global economy and financial stability", the fund warned.

China is in danger of stoking risks to the country's financial stability as policies to avert a growth slowdown amid trade tensions with the US undercut efforts to reduce threats to the economy stemming from high leverage, the International Monetary Fund (IMF) said in a report released Wednesday.

The IMF said Monday that the global economy will grow 3.7 percent this year, the same as in 2017 but down from the 3.9 percent it was forecasting for 2018 in July.

The IMF said that trade policy tensions and the imposition of import tariffs were taking a toll on commerce while emerging markets struggle with tighter financial conditions and capital outflows. "Growth has proven to be less balanced than hoped".

Mr. Khan said that the country was burdened due to debts incurred by the previous government and his government was constrained to borrow more money to pay back those debts.

The body now expects the USA economy to grow at a rate of 2.5 percent in 2019, a 0.2 percentage point decline from its April estimates.

The IMF said, "The growth forecast for 2018 is 0.3 percentage point lower than the April 2018 WEO forecast".

Trade tensions are expected to continue although Fund officials view US-Mexico-Canada trade agreement as a positive sign. The Trump administration has penalized almost half of all imports from China and has threatened more for the other half.

Citing the U.S. tariffs on China and Beijing's retaliatory measures, as well as U.S. President Donald Trump's plan to impose global automobile and parts tariffs, International Monetary Fund chief economist Maurice Obstfeld said he regards "further disruption in trade policies" as major near-term downside risks.

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