Nigeria's economy performing badly, might decline further in 2019

12 October, 2018, 10:16 | Author: Eric Barnett
  • Govt decides to ‘immediately’ approach IMF

With trade growth set to slow sharply amid a trade war between the United States and China, the International Monetary Fund cut its outlook for global GDP by two-tenths to 3.7 percent for 2018 and 2019, according to the quarterly World Economic Outlook Report issued Monday.

In the latest report, Taiwan's major trade partner South Korea is projected to grow 2.8% and 2.6% for 2018 and 2019, respectively, downward revisions by 0.2 and 0.3 percentage points from previous forecasts.

After a visit last week, the International Monetary Fund said Pakistan is facing significant economic challenges, with diminishing growth, high fiscal and current account deficits, and low foreign exchange reserves.

The IMF expects the United States economy to grow by 2.9 per cent and China's by 6.6 per cent this year.

"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".

Jakarta expects the economy to grow by 5.2 per cent this year and 5.3 per cent next year, given external pressures. But it predicts that US growth will slow to 2.5 per cent next year as the effect of recent tax cuts wears off and as US President Donald Trump's trade war with China takes a toll.

The IMF warned that China's growth even risked declining by a full percentage point by next year in the event of a "worse-case" scenario, involving further tariffs coupled with a collapse in confidence by businesses and markets.

"Political and policy uncertainty (for example, in the event of a no-deal Brexit or the re-emergence of concerns about fiscal policy in some highly indebted euro area countries) could adversely affect market sentiment and lead to a spike in risk aversion", it added.

Broadly speaking, global financial conditions remain accommodative and supportive of near-term growth, albeit somewhat tighter than six months ago.


It sees the unemployment rate dropping to 3.9 percent in 2018 and to 3.5 percent in 2019.

"We're seeing more and more countries, China included, let their currencies fluctuate", Lagarde said.

"It was a combination of factors that basically affected emerging and frontier markets".

Lagarde said she would meet Pakistani officials on Thursday, with expectations that Islamabad will request a bailout of its shaky economy.

Thus the expansion of the global economy would be reduced to around 2.9% both next year and in 2020.

"Trade policy reflects politics and politics remains unsettled in several countries, posing further risks", IMF chief economist Maurice Obstfeld told a press briefing in Bali, where the fund kicks off its annual meetings this week.

The IMF as usual urged emerging economies to accelerate structural reform measures to strengthen their economic fundamentals in the long term.

The IMF said higher trade barriers could disrupt global supply chains, slow the spread of technology and ultimately lower global productivity and welfare.

On-going concerns over Brexit negotiations and potential trade-wars involving the US, as well as an overall slower than expected growth within the European Union are cited as the main reasons for the more negative global calculations.

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