Pakistan to start talks with International Monetary Fund as rupee continues to fall

11 October, 2018, 11:31 | Author: Elaine Woods
  • Finance Minister Asad Umar speaks in a video message. — DawnNewsTV

The ongoing trade war between the USA and China could start having material effects on the economies of both countries within the coming years, according to new projections from the International Monetary Fund (IMF).

"The IMF now expects South Africa's economy to expand 0.8 per cent, down from a forecast of 1.5 per cent in July".

-China tariff war's impact to be felt next year, the fund cut its 2019 US growth forecast to 2.5 percent from 2.7 percent, while it cut China's 2019 growth forecast to 6.2 percent from 6.4 percent.

The IMF has slashed its latest growth forecasts, downgrading the US, China, the eurozone and the United Kingdom, as tit-for-tat tariffs bite.

"Owing to these changes, our worldwide growth projections for both this year and next are downgraded to 3.7 per cent, 0.2 percentage point below our last assessments and the same rate achieved in 2017", the report said. The U.S. economy is expected to grow 2.5 percent in 2019.

"China and a number of Asian economies are also projected to experience somewhat weaker growth in 2019 in the aftermath of the recently announced trade measures", it said.

As Washington and Beijing trade tariffs, economic growth is slowing for both countries and others.

The IMF chief economist said emerging economies were coping better than the developed ones, but their susceptibility to large global shocks has risen.

Pakistan Prime Minister Imran Khan on Wednesday assured the countrymen that his government would seek assistance from both friendly countries and the International Monetary Fund to overcome the balance of payments crisis. The IMF has also revised down its forecast for Indonesia's growth.

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Figures from the Central Bank of Nigeria website revealed that gross foreign reserves level dropped from $45.3 billion on September 10, 2018, to $43.6 billion on October 8.

The rupee tumbled to about 134 per dollar by 0530 GMT, after closing at 124.26 on Monday, in what market participants called a de facto devaluation.

"We need to join hands to fix the current trade system, not destroy it", she added.

"Although the International Monetary Fund forecast is lower than Government projections, it has observed that there is something happening", said an analyst with a local research firm.

"We are all deeply concerned about this news and the potential impact on the business".

"US growth will decline once parts of its fiscal stimulus go into reverse", Mr Obstfeld said in a statement.

China, however, could still be labelled a currency manipulator if the US Treasury decides to rely more heavily on the older 1988 Act, which allows for a more subjective assessment of whether a currency is being manipulated to gain unfair competitive advantage in trade.

He contended that China had "already retaliated" against his tariff increases.

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