In its latest World Economic Outlook, the organisation downgraded global economic growth to 3.7% for both 2018 and 2019 - 0.2% lower for both years than had been forecast in April.
Addressing a news conference at the International Monetary Fund and World Bank annual meetings in Bali, the IMF's Maurice Obstfeld cautioned that increased Chinese involvement in Pakistan's economy could bring both benefits and risks. This growth exceeds that achieved in any of the years between 2012 and 2016, he said. "Thus, policymakers still have an excellent opportunity to build resilience and implement growth-enhancing reforms", Mr. Obstfeld said.
"There are clouds on the horizon". The IMF has, therefore, not changed its estimate for the US' growth in 2018 keeping it as is at 2.9%. "In this environment, economic growth will likely slow significantly, and inflation will rise", he said in a statement.
Over the longer term the impact to the USA economy will be almost one percentage point, while to China it will be half that.
The government has urged delegates and participants of the ongoing 2018 International Monetary Fund-World Bank Group Annual Meetings in Nusa Dua, Bali, to remain calm following a 6.4-magnitude natural disaster that struck in East Java early on Thursday.
He stated, "Nigeria's growth, 1.9 per cent this year; 2.3 next year".
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The IMF now estimates the global economy to grow by 3.7 percent this year and next year.
The reason for the International Monetary Fund reducing its initial growth estimates is because of the imposition of duties on imports - read between the United States and China - and the under-performance of certain economies both developed and developing, including countries in the European Union, Great Britain, Japan, South Africa, Argentina, Turkey and Brazil. It now expects the global economy to only expand by 3.7% in 2018 and 2019, down from 3.9% before. "The negative revisions for emerging market and developing economies are more severe, at minus 0.2 and minus 0.4 percentage point respectively for this year and next year".
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 nonbank financial intermediation, it added.
The tariffs stem from the Trump administration's demands that China make sweeping changes to its intellectual property practices, rein in high-technology industrial subsidies, open its markets to more foreign competition and take steps to cut a $375 billion USA goods trade surplus.
"But there is no denying that the susceptibility to large global shocks has risen", Obstfeld said.