International Monetary Fund chief, Pakistan FM meet as Islamabad seeks bailout

International Monetary Fund chief, Pakistan FM meet as Islamabad seeks bailout

This saw China retaliate with 10 percent tariffs on $60 billion (£46 billion) of USA imports. Fed Chair Jerome H. Powell recently said these are "extraordinary times" for the USA economy.

"New vulnerabilities have emerged and the resilience of the global financial system has yet to be tested", it said in the twice-yearly Global Financial Stability Report.

At the top of the list are worries about emerging economies, especially Argentina and Turkey, two countries with heavy external debt that have had to raise interest rates sharply in recent months.

The body now expects the USA economy to grow at a rate of 2.5 percent in 2019, a 0.2 percentage point decline from its April estimates. The IMF estimated that the global economy will grow 3.7% in 2019, down from its July projection of 3.9%, the first time since July 2016 that the fund has downgraded its global growth forecast.

The head of the World Trade Organization warned that a "full-blown commercial war" could shrink global trade by almost 18% and also knock worldwide GDP, hurting the US, China, and others.

As interest rates rise in advanced economies, prompting investors to take their money in search of higher returns, the IMF recommended emerging economies take steps to insulate themselves from an exodus of funds.

Finance Minister Asad Umar left for Indonesia on Monday night to participate in the annual meetings of the International Monetary Fund and World Bank at Bali, scheduled to run until October 12, and formally request a bailout programme, reports Dawn news.

Brazil will see a 0.4 percentage-point drop in GDP growth to 1.4 percent for 2018 as a nationwide truckers strike paralyzed much of the economy.

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In a report released on Tuesday, the International Monetary Fund estimated that despite positive policy tailwinds in the USA economy resulting from things like tax reform, growth will be less than previously expected next year, as a result of the trade war.

"And to really understand the extent and composition of that debt, both in terms of sovereign, in terms of state-owned enterprises and the like of it, so that we can actually really appreciate and determine the debt sustainability of that country, if and when we consider a programme". "Our probability that we would attach to further bad news has gone up", Obstfeld said.

She said the rules-making World Trade Organization (WTO) had ways of addressing USA complaints that China's policies unfairly extract advanced technologies and put foreign companies at a disadvantage.

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

This was the fifth devaluation of the rupee since December 2017, which has seen the local currency losing a cumulative 26 percent of its value against the greenback.

The repercussions for the United States and China would be particularly severe, with 2019 GDP losses of more than 0.9 percent in the United States and 1.6 percent in China in 2019. The report showed household debt to GDP in China has more than doubled over the past decade to just under 50%, while that of other emerging market economies has remained relatively stable at just under 20%.

US President Donald Trump imposed a 10 percent tariff on $200 billion (£153 billion) worth of Chinese goods in September, which would increase to 25 percent by the end of 2018.

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