Published: Fri, October 12, 2018
Economy | By

International Monetary Fund raises Japan growth forecast, cuts global estimate due to trade tension

International Monetary Fund raises Japan growth forecast, cuts global estimate due to trade tension

The trade confrontation weighs on China in particular, where growth is projected to slow to 6.6 percent this year and 6.2 per cent in 2019, a downgrade of 0.2 points. "If you compare around the world with the best economies or emerging market economies, the level of debt in India is lower", the top International Monetary Fund official said. The acceleration relative to 2016-17 reflects a more supportive external environment, including stronger global growth, higher commodity prices, and improved capital market access, following efforts to improve fiscal balances in the aftermath of the commodity price slump. "It will be detrimental on both accounts for all participants", Lagarde told a news conference. So, while debt-related risks in China are large, there are also buffers.

In September, the USA implemented another round of tariffs on $200 billion worth of Chinese goods, which were met with countermeasures out of Beijing on $60 billion worth of US goods.

U.S. President Donald Trump, right, chats with Chinese President Xi Jinping during a welcome ceremony at the Great Hall of the People in Beijing, Nov. 9, 2017.

Treasury Secretary Steven Mnuchin met with People's Bank of China Governor Yi Gang on Thursday on the sidelines of the IMF-World Bank meeting.

"The prime minister, after consulting everyone, decided today that we should open talks with the IMF", Umar said.

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.

The Federal Reserve, the USA central bank, has raised short-term US rates three times this year as the American economy gains strength more than nine years after the end of the Great Recession.

China has responded in kind with its own barrage of levies, rattling nerves, especially among other Asian economies and already vulnerable nations such as Argentina. Indonesia has been swept up in the market turmoil triggered by rising USA interest rates and a stronger dollar, which has pushed the rupiah down 11 percent this year. Against a basket of currencies, the yuan has depreciated less.

The yuan currency lost over 8 percent between March and August at the height of market worries, though it has since pared losses as authorities stepped up support measures. "Moreover, the government is taking steps to contain risks by reining in off-budget borrowing and strengthening oversight, resulting in a slowdown in the buildup of debt", he said.

"In the United States, momentum is still strong as fiscal stimulus continues to increase, but the forecast for 2019 has been revised down due to recently announced trade measures, including the tariffs imposed on $200 billion of USA imports from China", IMF report said. "We have to find a way to get out of this hard situation".

Pakistan began exploring the possibility of yet another loan package with the International Monetary Fund while the Pakistan Muslim League (Nawaz) or PML-N was still in power and the exploratory talks continued under the interim government as well, the report stated.

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