Published: Tue, October 09, 2018
Economy | By

IMF says Pakistan has not approached fund for deal

IMF says Pakistan has not approached fund for deal

The IMF chief economist said that while government officials have been moving to rein in China's credit expansion, it was understandable they would take steps to boost growth in the face of trade tensions with the US, and these have impacted short-term economic growth, affecting the yuan.

Economic growth may accelerate 7 percent in 2023, International Monetary Fund said in its World Economic Outlook 2018, which was released on the Indonesian resort island of Bali on Tuesday.

The IMF, after consultations with the finance minister, had earlier stated that Pakistan needed to quickly secure "significant external financing" to stave off a crisis, though it did not suggest who could supply the money.

While the global economy is still on track to match last year's pace, which was the strongest since 2011, the new outlook suggests fatigue is setting in and the overall performance masked mounting weakness in emerging markets from Brazil to Turkey. "The negative revisions for emerging market and developing economies are more severe, at -0.2 and -0.4 percentage point, respectively, for this year and next year", Obstfeld said.

Maurice Obstfeld, Economic Counsellor and Director of IMF (L) talks as Wafa Amr, Communication Officer of IMF listens, during their press conference at the 2018 International Monetary Fund (IMF) World Bank Group Annual Meeting at Nusa Dua in Bali, Indonesia, October 9, 2018 in this photo taken by Antara Foto.

The US will also see its growth "decline" once its fiscal stimulus, delivered through wide-ranging tax cuts "goes into reverse" according to Mr Obstfeld.

The IMF has been recommending that Chinese authorities de-emphasize the quantity of growth to focus more on its quality and sustainability to allow the economy to better withstand shocks, Obstfeld said.

On Monday, the currency was trading at 128 per USA dollar on the open market and 124.20 in the official interbank rate.


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

Trade tensions are expected to continue although Fund officials view US-Mexico-Canada trade agreement as a positive sign.

Maurice Obstfeld, the IMF Economic Counsellor, warned against the rising tide of protectionism, saying that without multilateralism "the world will be a poorer and more risky place". That is because new risks are building as long-term interest rates rise in the U.S. -China trade war, coupled with threatened global USA automotive tariffs and retaliation from trading partners.

President Donald Trump has slapped tariffs on US$250 billion in Chinese goods this year, and Beijing has retaliated with levies US$110 billion of American products.

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

South Africa, only 0.8 percent this year. China was the fastest growing economy in 2017 as it was ahead of India by 0.2 percentage points.

Medium term growth could drop below 1.4 percent.

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