International Monetary Fund downgrades economic outlook

12 Octobre, 2018, 08:01 | Auteur: Auguste Feret
  • IMF chief economist Maurice Obstfeld

It's so concerned about the potential for a bad deal it has downgraded global economic growth to 3.7% for both 2018 and 2019, in its latest World Economic Outlook.

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

The IMF said the balance of risks was now tilted to the downside, with a higher likelihood that financial conditions will tighten further as interest rates normalize, hurting emerging markets further at a time when US -led demand growth will start to slow as some tax cuts expire.

"Nigeria's growth is projected to increase from 0.8 per cent in 2017 to 1.9 per cent in 2018 and 2.3 per cent in 2019 (0.4 percentage point higher than in the April 2018), buoyed by the impact of recovering oil production and prices", he said.

Finance Minister Asad Umar left for Indonesia on Monday night to participate in the annual meetings of the International Monetary Fund and World Bank at Bali, scheduled to run until October 12, and formally request a bailout programme, reports Dawn news.

"The forecast does not incorporate the impact of further tariffs on Chinese and other imports threatened by the United States, but not yet implemented, due to uncertainty about their exact magnitude, timing, and potential retaliatory response", according to the International Monetary Fund. Growth has proven to be less balanced than we had hoped.

When the world's two biggest economies are "at odds", that is going to create "a situation where everyone is going to suffer", Obstfeld said.

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She said a safer global economy also means tackling the issue of sustainability, including the existential threat of climate change.

And it stressed "cooperative solutions" to help boost continued growth in trade "remain essential to preserve and extend the global expansion".

It said that the composition of spending and revenues should be growth friendly and protect the most vulnerable.

Nigeria has four refineries, with a combined capacity to refine 445,000 barrels per day, but only function at less than 30 per cent capacity.

Rebuilding Fiscal Buffers It noted that public debt has increased in emerging markets over the past decade, and is projected to increase further in numerous largest economies over the next five years.

"Growing concerns about resilience and policy credibility of emerging markets in the face of external headwinds could lead to further capital outflows and possibly rising global risk aversion, which could send shock waves across broader risky asset markets".

United States stimulus also adds to the "already-unsustainable" debt and deficit that will undercut future growth, the report warned. "Notwithstanding the present demand momentum, we have downgraded our 2019 USA growth forecast owing to the recently enacted tariffs on a wide range of imports from China and China's retaliation".

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