Korea cut to 2.8% in '18 and 2.6% in '19: International Monetary Fund report

Mae Love
October 12, 2018

The IMF said the global economy would grow 3.7 per cent this year, the same as in 2017 but down from the 3.9 per cent it was forecasting for 2018 in July.

While tax cuts and increased spending have seen an immediate upswing in United States growth, the International Monetary Fund warned that the country could face an unwelcome "inflation surprise", which would prompt the Federal Reserve, America's central bank, to hike rates at a faster-than-expected pace.

The rapid build-up in debt in China in recent years also is a concern, although Chinese authorities have taken steps to rein in debt growth, he said.

The latest IMF "World Economic Outlook" report released at the IMF-World Bank Annual Meetings in Bali on Tuesday hints at possible further negative shocks to growth prospects.

The US and China have been at loggerheads for months with the nations locked in a tit-for-tat trade conflict as they continue to slap hefty tariffs on each other. In September, Trump imposed tariffs on almost $200 billion of Chinese imports, with China responding with higher tariffs on about $60 billion of USA imports.

Yi, in a closed door meeting on Thursday with investment officials, explained that China's monetary policy was on an opposite rate cycle to that of the United States, which is tightening monetary policy due to a strong economy, two people who attended the meeting said.

The IMF has also revised down its forecast for Indonesia's growth.

World Bank President Jim Yong Kim also warned against an escalation of the trade row, saying that if all countries maxed out their trade threats, "We'd see a clear slowdown in the economy and the impact on developing countries would be great".

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The fund urged governments to focus on policies that could share the benefits of growth more widely, helping counter the growing mistrust of institutions and avoiding "protectionist reactions to structural change".

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

Nigeria has four refineries, with a combined capacity to refine 445,000 barrels per day, but only function at less than 30 per cent capacity.

A severe recession would slash USA public wealth by about Dollars 5 trillion, causing vastly more damage to Washington's finances than just an increase in debt and deficits, the International Monetary Fund has warned.

That's a significant downgrade from the IMF's assessment in April, when it projected a 3.9 percent growth rate.

Rather than rising, growth has plateaued at 3.7 percent.

USA stimulus also adds to the "already-unsustainable" debt and deficit that will undercut future growth, the report warns. The scenario, which imagines a deep global recession, rising interest rates but collapsing stock and real estate prices, would see sovereign debt balloon by nine per cent but net worth dive by another 17 per cent, mainly because falling real estate prices would drag down the value of publicly owned structures.

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