International Monetary Fund cuts growth outlook for Canada amid trade tensions

International Monetary Fund cuts growth outlook for Canada amid trade tensions

Talking about global outlook, Chief Economist at IMF Gita Gopinath in her blog titled The Global Economy: A Delicate Moment said that weakness in global expansion is expected to persist into the first half of 2019 from second half of 2018.

The IMF, in its World Economic Outlook released at the on-going joint annual spring meetings with the World Bank in Washington DC, also projected the country's growth rate to reach 2.5 per cent in 2020 from the 2.1 per cent it projected for 2019. The World Bank projected 3.4 % while ADB estimated 3.9 % GDP growth rate for Pakistan in the current fiscal year ending June 30.

"In India, growth is projected to pick up to 7.3% in 2019 and 7.5% in 2020, supported by the continued recovery of investment and robust consumption amid a more expansionary stance of monetary policy and some expected impetus from fiscal policy", the WEO noted.

The projected recovery in the second half of 2019 is based on an ongoing build-up of policy stimulus in China, recent improvements in global financial market sentiment, the waning of temporary drags in the Eurozone, for instance in Germany and Italy, and a gradual stabilisation of conditions in stressed emerging market economies such as Argentina and Turkey - both of which suffered steep currency devaluations and economic downturns in 2018.

However, Gopinath said that a continued trade tension between the U.S. and China would have a negative impact on oil prices and other commodities.

The Fund's six monthly World Economic Report has pointed to the US-China trade war and a potentially disorderly British exit from the European Union as key risks and warned that the chances of further cuts to the outlook were high.

U.S. Treasury yields slid on concerns about the global economic outlook, which also weighed on U.S. stocks. The next year growth rate forecast by the fund was generally in line with 2.7pc growth projected by the World Bank a day earlier.

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Growth in emerging market and developing economies will stabilize at five per cent, though with considerable variance as emerging Asia continues to grow faster than other regions.

Over the medium term, India's growth is expected to stabilise at just under 7.75 per cent "based on continued implementation of structural reforms and easing of infrastructure bottlenecks", it said.

"We expect a growth recovery; growth was reasonably strong previous year and we think that things will improve a bit going forward".

Still, the fund is expressing worries about tensions between the world's two biggest economies, which have traded tariffs on hundreds of billions of dollars' worth of products in a fight over China's aggressive push to supplant American technological supremacy. However, there is no change forecast for 2020.

USA tariffs on Chinese imports are hitting Chinese growth and also weighing on Latin America and other parts of the world dependent on Chinese demand for commodities.

China was trying to rebalance its massive economy away from investment and exports when US President Donald Trump ordered higher tariffs on Chinese imports beginning in 2018. International Monetary Fund expects growth to recover in the current fiscal and the next.

The IMF said that to secure its growth prospects, it is essential that India continues to implement structural and financial sector reforms and makes an effort to reduce public debt through continued fiscal consolidation.

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