Pakistan says it will seek International Monetary Fund bailout as reserves dwindle

By MEDEF, via Wikimedia Commons

The IMF on Tuesday cut its outlook for global GDP growth by two-tenths to 3.7 per cent for 2018 and 2019, citing the economic uncertainty.

The half-yearly Global Financial Stability Report released on Wednesday finds a 5 per cent probability that these emerging economies could see debt outflows of US$100 billion or more, representing 0.6 per cent of their combined GDP, over a period of four quarters.

China's economy could also take a hit: The IMF revised its forecast for economic growth in 2019 down to 6.2 percent, slightly lower than previous estimates and down from 6.6 percent this year.

With weakening growth and uncertainties over trade, smoothing the economic impact of structural adjustments and de-risking "is a very hard act of judgment that policymakers in China have to struggle with", Vitor Gaspar, director of the IMF's fiscal affairs department, told reporters at a separate briefing on its Fiscal Monitor, a report that tracks the state of countries' public finances.

The IMF expects the USA economy to continue growing this year at 2.9%, but sees that rate falling to 2.5% next year amid the country's escalating trade war with China.

"Looking ahead, clouds appear on the horizon", the report, published at the body's annual meeting in Bali, Indonesia, says.

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.

Central bank rate hikes were a "necessary development", said International Monetary Fund chief Christine Lagarde.

The downgrade reflects a confluence of factors, including the introduction of import tariffs between the United States and China, weaker performances by euro zone countries, Japan and Britain.

The IMF expects SA's economy to expand by 1.4% in 2019, down from its April projection of 1.7%. The situation is getting more and more serious as a result of the US$2 billion secret loans from Credit Suisse and Russian lender VTB for the purchase of naval equipment and a fishing fleet that were backed by Mozambique's financial minister without parliamentary approval.

"We need to join hands to fix the current trade system, not destroy it", she added.

The Treasury's currency report will be released just a few weeks after the USA currency manipulation guidelines were included in the new United States-Mexico-Canada Agreement. "Our probability that we would attach to further bad news has gone up", Obstfeld said.

The model also includes the effects of a reduction in business confidence that reduces investment and leads to a tightening of financial conditions.

The latest of these exchanges saw US President Donald Trump impose a 10 percent tariff on $200 billion (£153 billion) worth of Chinese goods in September, which would increase to 25 percent by the end of 2018.

He contended that China had "already retaliated" against his tariff increases.

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