International Monetary Fund cuts global growth forecasts

Pompeo has openly expressed his reservations about bailing out a former non-NATO ally

Before his departure for Bali, Indonesia, for attending the annual meeting of IMF/WB from Oct 8 to 14, Federal Minister for Finance Asad Umar announced the government's decision for approaching the IMF for getting the 22nd programme of the Fund.

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.

But the U.S. tax cuts and rising spending that have boosted growth, helping compensate for the impact of the growing trade conflict, could spark a sudden "inflation surprise", and in turn lead to faster-than-expected rise in USA interest rates, according to the fund.

"Growth has proven to be less balanced than we had hoped", IMF Chief Economist Maurice Obstfeld told reporters Tuesday in Bali. In April, the International Monetary Fund was forecasting 2.9 per cent for Australia next year.

The fund left its 2018 USA forecast unchanged but cut its expectation for next year, citing the impact of the trade conflict. But the fund lowered China's economic outlook for 2019 to 6.2 per cent, which would be the country's slowest growth since 1990.

Germany, the economic powerhouse of Europe, could be particularly hard hit by a drop in manufacturing orders and trade volumes.

The IMF expects SA's economy to expand by 1.4% in 2019, down from its April projection of 1.7%.

Downgrades to global growth also reflected predictions of a slower expansion in the eurozone as well as turbulence in a number of emerging market economies.

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Global economic growth is now expected to reach 3.7% in 2018 and 2019, down from the IMF's previous prediction of 3.9% in July.

The Washington-based institution had predicted a 2019 growth rate of 1.5 percent for Russian Federation in its last update in July. It predicted China's GDP growth at 6.6% in 2018-'19 and downgraded it to 6.2% for 2019-'20. Inflation forecast for 2018 was 15 percent and for 2019 16.7 percent.

Finance Minister Asad Umar said that the country has no choice but to go to the International Monetary Fund.

Some energy-rich emerging market countries have fared better due to higher oil prices, with Saudi Arabia and Russian Federation seeing forecast upgrades.

But the already tricky transition has been complicated by US President Donald Trump's use of import tariffs to punish China for what he considers predatory trade practices. "Our probability that we would attach to further bad news has gone up", Obstfeld said. Washington charges that China uses predatory tactics, including outright cybertheft and forcing foreign companies to hand of trade secrets in exchange for access to the Chinese market.

SBP spokesman Abid Qamar told Reuters "the market is aware about the overall macroeconomic conditions and based on those conditions, they are having their own expectations about the exchange rate, so that is driving (the rupee valuations) now".

Pakistan's current account deficit widened 43 percent to $18 billion in the fiscal year that ended June 30, while the fiscal deficit has ballooned to 6.6 percent of gross domestic product. It also assumes that Trump imposes a 25 percent tariff on imported cars and auto parts imports.

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