Brexit to be threat to world economy, says International Monetary Fund

IMF predicts India will grow at 7.3% in 2018-’19

But in its latest World Economic Outlook, the International Monetary Fund cut its global economic growth forecasts for 2018 and 2019, saying trade policy tensions and the imposition of import tariffs are taking a toll on commerce while emerging markets struggle with tighter financial conditions and capital outflows.

The Fund said that revenue gains from non-financial public corporations and government financial assets alone could be as high as 3 per cent of GDP a year, equivalent to the annual corporate tax collections across advanced economies. The country returned to a growth rate of 1.5 percent in 2017 after two years of decline.

'A sharp tightening of global financial conditions could be triggered by a further escalation of trade tensions or by a sudden shift in risk sentiment caused by rising geopolitical risks or policy uncertainty in major economies'.

At a news conference at the International Monetary Fund and World Bank annual meetings in Bali, Obstfeld said Pakistan is facing financing gaps as it has been hit by a large fiscal and current account deficit, a low level of reserves and a currency he described as "too rigid" and over-valued.

The Outlook said the global economy is expected to grow at 3.7 percent this year and next year - down 0.2 percentage points from an earlier forecast, as the trade war started to hit economic activity worldwide.

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

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

"Owing to these changes, our global 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.

"We have supported the move of China towards (currency) flexibility and we want to encourage the authorities to continue on this path", she said. The report said that aggregate growth in the emerging market and developing economy group stabilised in the first half of 2018.

He said the talks would be held for "such a programme, a stabilisation, a recovery programme, on which basis we could overcome this financial crisis".

Prominent U.S. academic Jeffrey Sachs was less diplomatic in his assessment of Trump's shepherding of American trade relationships, slamming the president's repeated claims that deficits with China and other nations meant Americans were being taken advantage of.

According to the IMF, Japan's growth is projected to soften to 0.9 percent in 2019, unchanged from the July estimate. The Trump administration has penalized almost half of all imports from China and has threatened more for the other half.

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