International Monetary Fund forecasts 7.1% economic growth for 2019

IMF forecasts India's 2018 growth at 7.3 pc, praises GST, bankruptcy code

IMF forecasts India's 2018 growth at 7.3 pc, praises GST, bankruptcy code

The fund left its 2018 USA forecast unchanged but cut its expectation for next year, citing the impact of the trade conflict.

Breaking the negative trend of six consecutive sessions, bulls made a strong comeback as it was reported that Pakistan would officially approach International Monetary Fund for a bailout.

"There are clouds on the horizon".

The euro zone's 2018 growth forecast was cut to 2% from 2.2% previously, with Germany particularly hard hit by a drop in manufacturing orders and trade volumes. Not only have some downside risks that the last World Economic Outlook identified been realised, the likelihood of further negative shocks to our growth forecast has risen. The move is speculated to have been pushed by authorities in response to the IMF's calls for a weaker exchange rate.

If the trade war continues, it could take a significant bite out of global growth, according to the fund. Dow futures lost 0.5 per cent and the S&P 500 futures were down 0.6 per cent.

"We have not been formally approached yet", said Maurice Obstfeld, the IMF's top economist, during the fund's annual meeting in Bali Tuesday.

The IMF's cut to its outlook was broad-based. Since its last forecast in March, the International Monetary Fund has also revised upwards Israel's expected inflation this year from 0.7% to 0.9%.

On Sunday Pakistan's Prime Minister Imran Khan hinted at approaching the IMF, saying: "We may approach the IMF for support to the country's financial problems", but he insisted on looking toward other countries: "We have requested three countries to deposit funds in the State Bank of Pakistan that would boost the country's foreign exchange reserves".

President Erdogan retaliated by slapping U.S. exports with heavy tariffs, with extra duties on products such as cars, alcohol and tobacco.

The dominant USA economy has been shielded from the ill effects so far due to the stimulus provided through tax cuts and spending policies, but that will wear off by 2020.

Reflecting such sentiments, growth in trade of goods and services across the world was revised down 0.6 point from the July forecast to 4.2 percent in 2018 and 0.5 point to 4.0 percent in 2019, according to the report.

The global organisation said that inflation is expected to pick up in India due to a narrowing output gap, and the effects of exchange rate depreciation and rising fuel prices. Core inflation, which excludes volatile items such as energy, will vary from country to country, 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.

It has recently taken a more accommodating stance to help buffer China's economy from the U.S. trade measures.

"Trade policy reflects politics and politics remains unsettled in several countries, posing further risks", Obstfeld said. "Inclusive fiscal policies, educational investments, and ensuring access to adequate health care can reduce inequality and are key priorities", he said.

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