Pakistan poised to seek bailout from International Monetary Fund to stabilise economy

Hugh Fox
October 13, 2018

The IMF said it was now predicting 3.7 percent global growth in both 2018 and 2019.

The ongoing trade war between the USA and China could start having material effects on the economies of both countries within the coming years, according to new projections from the International Monetary Fund (IMF).

The delegation will leave for Bali to attend the meeting taking place on the Indonesian island from October 12 to 14, sources within the Ministry of Finance said, adding that Finance Minister Asad Umar will meet the International Monetary Fund officials on the sidelines of the meeting, where he will discuss the challenges confronting the Pakistani economy and the proposed International Monetary Fund loan programme.

The fund kept its forecast for growth in the Chinese economy unchanged at 6.6 per cent this year.

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"Notwithstanding the present demand momentum in the USA, we have downgraded its 2019 growth forecast, owing to the recently enacted tariffs on a wide range of imports from China and China's retaliation".

At its annual meeting in Bali it downgraded its prediction to 3.7% from 3.9% in July.

The United States (US) has said it is closely examining Pakistan's request for the International Monetary Fund (IMF) programme to address its economic challenges.

With weakening growth and uncertainties over trade, smoothing the economic impact of 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, on Wednesday. Overall, global growth will remain steady - about 3.7 percent this year - and exceed that of 2012-2016. The estimate for 2018 is 0.2 percent lower than its earlier forecast.

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In September 2018 Donald Trump imposed tariffs worth $200 billion on Chinese goods and threatened to sign off on a further $267 billion - an escalation in a tariff war that, at that point, had only seen both countries levy tit-for-tat duties on each other's imports.

The IMF also said that further disruptions in trade policies could occur owing to downside risks from two major impending regional trade arrangements-the United States-Mexico-Canada Agreement (which awaits legislative approval) and the European Union (with the latter negotiating the terms of Brexit).

Nigeria's economy recorded slow growth in the second quarter of 2018 as oil sector contracted by 3.95% compared to 14.77% growth in the first quarter and 3.53% year-on-year.

Adjustments would occur as domestic production displaces higher-priced imports, the model shows, but in the long run, the US GDP would still be 1.0 per cent below a baseline without these tariffs, while China's GDP output would be one half percent below the baseline.

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