Published: Wed, October 10, 2018
Economy | By

Rupee Tumbles After Pakistan Requests IMF Bailout

Rupee Tumbles After Pakistan Requests IMF Bailout

It is unclear how this projection is going to affect the Fund's assessment of Ghana's economic performance as the country nears the completion of the three-year program. It was the first downgrade since July 2016.

On Sunday Pakistan's Prime Minister Imran Khan hinted at approaching the IMF, saying: "We may approach the IMF for support to the country's financial problems", but he insisted on looking toward other countries: "We have requested three countries to deposit funds in the State Bank of Pakistan that would boost the country's foreign exchange reserves".

"There are clouds on the horizon", he said. German growth was revised down to 1.9 percent in both 2018 and 2019 due to a slowdown in exports and industrial production.

After consulting with "leading economists", Pakistan will formally approach the International Monetary Fund for support and Finance Minister Asad Umar will hold talks with officials during the lender's annual meetings in Bali this week, the Finance Ministry said in a statement late Monday.

To cool inflationary pressure, the American central bank, the Federal Reserve, is raising interest rates, which acts as a further attraction to global capital because returns are higher.

Further moves towards a trade war could "significantly harm global growth".

The IMF had earlier estimated that escalating tit-for-tat tariffs could lower global output by more than 0.8 per cent by 2020.

The Nikkei closed down 1.32 per cent this morning at 23,469.39.

According to sources, IMF's determination was to the contrary and they wanted the rupee to be traded above Rs 145 to a dollar.

"It also expects the economy to grow 1.4 per cent in 2019, down from a previous estimate of 1.7 per cent".

The downgrade reflects a confluence of factors, including the introduction of import tariffs between the USA and China, weaker performances by euro zone countries, Japan and Britain.

The IMF expects growth in Russian Federation at 1.7 percent this year and 1.8 percent next year, it said in an update to its World Economic Outlook on Tuesday. South Africa, only 0.8 per cent this year; Angola, contracting by 0.1 per cent this year.

Several emerging markets had their forecasts cut, including Argentina, Brazil, Iran and Turkey, reflecting factors including tighter credit.

It cited Australia, New Zealand and Britain as countries that are taking positive steps to better manage their assets against the growth of future liabilities.

The Russian economy will grow faster than previously expected as the macroeconomic outlook improves, the International Monetary Fund (IMF) forecasts.

The IMF said there was a "risk of contagion" as investors became increasingly nervous about the strength of emerging markets, with the risk of capital flows towards the USA accelerating. Global growth will slow to 3.6 per cent by 2022-2023, as growth in rich nations falls back to potential, it said. "Inclusive fiscal policies, educational investments, and ensuring access to adequate health care can reduce inequality and are key priorities", he added. "Policymakers must take a long-term perspective to address this malaise".

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