IMF, Pakistan to meet as Islamabad seeks bailout

Pakistan's Prime Minister Imran Khan has vowed to steer the country out of its looming balance-of-payments crisis

While tax cuts and increased spending have seen an immediate upswing in U.S. 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.

Although the newly projected rate is same as last year's rate of 3.7 percent, this growth exceeds that achieved in any of the years between 2012 and 2016, and it occurs as many economies have reached or are nearing full employment and as earlier deflationary fears have dissipated.

The IMF said in an update to its World Economic Outlook it was now predicting 3.7 per cent global growth in both 2018 and 2019, down from its July forecast of 3.9 per cent growth for both years. But it predicts that USA growth will slow to 2.5 per cent next year as the effect of recent tax cuts wears off and as President Donald Trump's trade war with China takes a toll.

An upswing in economic risks due to rising trade tensions and debt levels has prompted the International Monetary Fund to cut its forecast for world growth for this year and next.

Maurice Obstfeld, the IMF's chief economist, said at a media briefing about the fund's latest World Economic Outlook: "When you have the world's two largest economies at odds, that's a situation where everyone suffers".

In several key economies, moreover, growth is being supported by policies that seem unsustainable over the long term.

Global trade is projected to expand by 4.2 per cent this year, six tenths less than expected in July and almost a full point lower than the forecast in April.

The 0.2 percentage point downgrade to the 2019 growth forecast is attributable to the negative effect of recent tariff actions, assumed to be partially offset by policy stimulus, it said.

With their core inflation rates largely quiescent, advanced economies continue to enjoy easy financial conditions. On Monday, the currency was trading at 128 per USA dollar on the open market and 124.20 in the official interbank rate.

Emerging Asia continued to register strong growth, supported by a domestic demand-led pickup in the Indian economy from a four-year-low pace of expansion in 2017, even as activity in China moderated in the second quarter in response to regulatory tightening of the property sector and nonbank financial intermediation, it added.

"But there is no denying that the susceptibility to large global shocks has risen", Obstfeld said.

He urged all countries to prepare their workforces for the ways that new technologies will change the nature of work.

On Wednesday, the Prime Minister of Pakistan, Imran Khan vowed to eliminate the economic crisis out of the country, and said it only needs $10-12 billion to fix it.

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