Pakistan seeks largest loan package from IMF

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

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

It said the dispute between the USA and China would especially leave developing economies vulnerable to sudden stresses.

"Nonetheless, despite trade tensions and continued monetary policy normalisation in a few advanced economies, global financial markets have remained buoyant and appear complacent about the risk of a sudden, sharp tightening in financial conditions".

China is in danger of stoking risks to the country's financial stability as policies to avert a growth slowdown amid trade tensions with the US undercut efforts to reduce threats to the economy stemming from high leverage, the International Monetary Fund (IMF) said in a report released Wednesday.

The Fund in its 2018 World Economic Outlook released yesterday also warned that the fragile growth of the region may not be enough for the attainment of the Sustainable Development Goals, if the trend remains for a while.

A bull run has taken US equities to record highs this year.

Prime Minister Imran Khan's new administration took office in August vowing to weigh up whether to seek an International Monetary Fund bailout to stabilise its economy as it sought other avenues of financing, as analysts warned the looming crisis was becoming more urgent.

The downgrade reflects a confluence of factors, including the introduction of import tariffs between the United States and China, weaker performances by eurozone countries, Britain and Japan, and rising interest rates that are pressuring some emerging markets with capital outflows, notably Argentina, Brazil, Turkey, South Africa, Indonesia and Mexico.

"In Angola, the region's second largest oil exporter, real GDP is expected to shrink by 0.1 per cent in 2018, following a 2.5 per cent contraction in 2017, but is projected to increase by 3.1 per cent in 2019".

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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 IMF notes that credit conditions in emerging markets have tightened since mid-April, driven by a stronger USA dollar, escalating trade tensions, and political and policy risks unique to individual countries.

According to the IMF, Japan's growth is projected to soften to 0.9 percent in 2019, unchanged from the July estimate.

The IMF also warned the new government that growth would likely slow and inflation rise further if it does not act fast.

The International Monetary Fund teases us. "So, we will be listening very, very attentively when and if they come to us".

The repercussions for the United States and China would be particularly severe, with 2019 GDP losses of more than 0.9 percent in the United States and 1.6 percent in China in 2019.

Trump has levied or threatened tariffs on goods from economies around the world, notably China, but also on traditional allies such as the European Union.

US President Donald Trump imposed a 10 percent tariff on $200 billion (£153 billion) worth of Chinese goods in September, which would increase to 25 percent by the end of 2018.

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