International Monetary Fund warns Nigeria on tough times ahead

Finance Minister Asad Umar speaks in a video message. — DawnNewsTV

Finance Minister Asad Umar speaks in a video message. — DawnNewsTV

IMF's chief economist and director of research Maurice Obstfeld, told journalists that "what affects the three major economies affect the whole continent as majority of the countries relies on their trajectories". Britain's FTSE 100 dropped 0.4 per cent to 7,201.

The International Monetary Fund has raised Russia's gross domestic product (GDP) growth forecast to 1.8 percent for next year as it cuts its global forecasts.

The risk of further capital outflows remains high for Indonesia, especially if oil prices continue to rise, and this is quite worrisome, because 40 percent of its fiscal deficit, although below 2 percent of GDP, is held by typically jittery foreign portfolio investors.

The IMF also cut its outlook for China as a result of the tariffs, shaving its projection for growth next year to 6.2 per cent, down 0.2 point from three months ago.

The ongoing trade war between the USA and China could start having material effects on the economies of both countries within the coming years, according to new projections from the International Monetary Fund (IMF).

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.

The IMF has also projected the economy will grow at an average of 4,7 percent between next year and 2023. "In Nigeria, inflation is projected to fall to 12.4 percent in 2018, from 16.5 percent in 2017, and to rise to 13.5 percent in 2019", the report read.

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In September, the USA implemented another round of tariffs on $200 billion worth of Chinese goods, which were met with countermeasures out of Beijing on $60 billion worth of US goods. The fund downgraded its forecast for United States growth next year to 2.5 per cent, down 0.2 percentage point from July, after factoring in the impact of tariffs imposed by the Trump administration and retaliatory duties by other nations. "Across emerging market and developing economies, activity continued to improve gradually in energy exporters", the International Monetary Fund said. "Any sharp reversal for emerging markets would pose a significant threat to advanced economies", said Obstfeld.

Among emerging market and developing economies, the growth prospects of many energy exporters have been lifted by higher oil prices, but growth was revised down for Argentina, Brazil, Iran, and Turkey.

ANALYST'S TAKE: "Renewed tension between the U.S. and China has capped risk sentiment as a range of issues from trade to diplomacy are likely to challenge China-U.S. relationship", Zhu Huani of Mizuho Bank said in a commentary.

How bad could the trade war get?

However the United States, one of the IMF's biggest donors, has raised fears Pakistan could use any bailout money to repay mounting loans from China, sparking criticism from Islamabad.

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

He contended that China had "already retaliated" against his tariff increases.

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