International Monetary Fund projects India growth at 7.3% in 2018

Blanche Robertson
October 11, 2018

Lagarde told reporters Thursday at the annual meeting of the International Monetary Fund and World Bank (WB) in Bali, Indonesia, that so far there had been no "contagion" of major damage from penalty tariffs imposed by the two countries on each other's exports, but that they do risk hurting "innocent bystanders".

The Outlook said the global economy is expected to grow at 3.7 percent this year and next year - down 0.2 percentage points from an earlier forecast, as the trade war started to hit economic activity worldwide.

A bull run has taken US equities to record highs this year.

It predicted 2.9 percent USA growth this year, dropping to 2.5 percent next year, and to 1.8 percent in 2020, as the effect of US tax cuts wears off and the trade war with China inhibits growth.

India's medium-term growth prospects remain strong at 7.75 per cent, benefiting from ongoing structural reform, but have been marked down by just under 0.5 percentage point relative to the April 2018 WEO, it said.

The Economic Counsellor and Director of Research Department at the IMF, Maurice Obstfeld disclosed the Fund's new projection for global economic growth.

If China and the United States were to resolve their trade differences, it "would be a significant upside to the forecast".

As interest rates rise in advanced economies, prompting investors to take their money in search of higher returns, the IMF said emerging economies should take steps to insulate themselves from an exodus of funds.

IMF Chief also confirmed the news of meeting with the Minister and other Pakistani officials and said in a statement, "During the meeting, they requested financial assistance from the IMF to help address Pakistan's economic challenges". This would be in keeping with a fall in global GDP growth, which the International Monetary Fund has predicted to fall from 2& to 1.8% in 2019.

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"U.S. growth will decline as fiscal stimulus begins to unwind in 2020, at a time when the monetary tightening cycle is expected to be at its peak", the IMF said.

"Growth performance varies, however, across countries".

In countries with "systematically important financial sectors", total non-financial debt has risen to US$167 trillion, or about 250 per cent of their combined GDP, up from US$113 trillion or 210 per cent of GDP in 2008.

"Where we are now is we've gotten some bad news".

"We will be listening very, very attentively when and if they come to us", said Obstfeld.

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. -China trade war, coupled with threatened global US automotive tariffs and retaliation from trading partners.

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

The report was written before the United States, Canada and Mexico finalized an updated trade deal.

Much of the global angst has been dominated by Trump's escalating tariff war with China and his disdain for world trading norms.

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