Published: Thu, October 11, 2018
Money | By Armando Alvarado

International Monetary Fund downgrades SA's 2018 growth forecast to 0.8%

International Monetary Fund downgrades SA's 2018 growth forecast to 0.8%

Speaking to journalists in Bali, the Deputy Director, Research, IMF, Gian Maria Milesi-Ferretti, said the largest economies on the continent were holding down economic development in Africa as a result of poor growth rate.

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.

Pakistan's new government has made a decision to open talks on emergency financial assistance with the International Monetary Fund amid a mounting balance of payments crisis, the finance minister told local television on Monday.

On Monday, it downgraded world growth forecasts for next year, blaming new trade barriers.

In its report the International Monetary Fund said the tit-for-tat tariffs imposed by the U.S. and China, weaker performances by eurozone countries, Japan and Britain all conspired to increase pressure on the global economy, while "the possible failure of Brexit negotiations poses another risk".

The IMF, in its twice annual assessment of global financial stability, said conditions remain broadly conducive to economic growth, but are at risk of worsening should emerging markets deteriorate further or trade tensions escalate.

China's economy could also take a hit: The IMF revised its forecast for economic growth in 2019 down to 6.2 percent, slightly lower than previous estimates and down from 6.6 percent this year.

The Breton Woods institution, which said this at the Annual General Meetings of the IMF/World Bank now going in Bali, Indonesia, also revised downwards growth prospects for Nigeria in 2018 from 2.1 per cent to 1.9 per cent.

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She declined to comment on the recent market rout, but said US equities and overall stock prices "in general have been extremely high".

In the fund's latest Global Economic Outlook, it estimated that the South African economy would grow by 0.8% this year, down from its initial projection of 1.5% in April. "We look forward to our continuing partnership", it added.

"Where we are now is we've gotten some bad news. And we've canceled a couple of meetings because I say they're not ready to make a deal".

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.

The IMF fears this could lead to sharp falls in markets. For the record, the International Monetary Fund has lowered the growth projections for both India and China by 0.4 per cent and 0.32 per cent, respectively, from its annual April's World Economic Outlook.

The effects on the U.S. and China would be particularly severe, with 2019 GDP losses of more than 0.9% in the USA and 1.6% in China in 2019.

It also assumes that Trump imposes a 25% tariff on imported cars and auto parts imports.

Thor Equities CEO Joe Sitt on the increasing USA trade tensions with China.

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