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

International Monetary Fund lowers global growth estimates

"Today, it was decided that we should start talks with IMF", Finance Minister Asad Umar told GEO TV in an interview on Monday night.

The IMF expects the USA economy to grow 2.9 per cent this year, the fastest pace since 2005 and unchanged from the July forecast.

"Owing to these changes, our worldwide growth projections for both this year and next are downgraded to 3.7 percent, 0.2 percentage point below our last assessments and the same rate achieved in 2017", the report said.

The fund, releasing its latest outlook on the global economy, reduced its forecast for Australian economic growth through 2019 by 0.3 percentage points from its April prediction.

Growth in both the United States and China were expected to slow next year as a result of the trade dispute triggered by US President Donald Trump.

The IMF warned of a permanent hit to growth if the USA goes ahead with a threat to impose a 25 percent tariff on all imported cars.

The report comes on the eve of the October 12-14 meetings in Bali, Indonesia, of the International Monetary Fund and its sister lending organization, the World Bank. So, the aggregate - over three per cent this year, close to four per cent next year - is despite the largest economies in the continent doing poorly.

Over the longer term the impact to the U.S. economy will be almost one percentage point, while to China it will be half that. It now expects the global economy to only expand by 3.7% in 2018 and 2019, down from 3.9% before.

The near-term impact of a full-fledged trade war on growth in China will be almost double that of the United States, according to the IMF's estimates.

With their core inflation rates largely quiescent, advanced economies continue to enjoy easy financial conditions.

"But there is no denying that the susceptibility to large global shocks has risen", Obstfeld said. "Any sharp reversal for emerging markets would pose a significant threat to advanced economies, as emerging market and developing economies' GDP now constitutes about 40 percent of world GDP at market exchange rates".

Mr. Obstfeld said the impacts of trade policy and uncertainty are becoming evident at the macroeconomic level, while anecdotal evidence accumulates on the resulting harm to companies. It noted that risks from "further disruptions in trade policies" have become more prominent.

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

Stressing that the International Monetary Fund do not see the recent developments as part of a generalized investor pullback from emerging and frontier markets, Obstfeld said they also do not expect that the current problem cases will necessarily spill over to countries with stronger fundamentals.

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