Indian economy poised to pick up in 2019, says International Monetary Fund

Stocks are falling after China revealed worst growth since the financial crisis

China yesterday reported that 2018 had seen its slowest economic growth in nearly three decades, and in a sign of the struggle Beijing faces, growth in the last three months of the year clocked in at 6.4 per cent, matching a low seen during the global financial crisis 10 years ago.

"Global growth is expanding at a healthy rate, but we are seeing a slowing momentum", says IMF Head of Research Gita Gopinath. "But the risk of a sharper decline in global growth has certainly increased", she said, urging policymakers to brace for a "serious slowdown".

Advanced economies have been on a declining path in terms of growth and this is taking place more rapidly than previously thought, according to the report.

Sterling was a shade firmer at US$1.29 after data showed British workers' pay growth hit a new 10-year high and employment had grown by much more than expected in the three months to the end of November.

International Monetary Fund also projected that in 2020, global economic growth will pick up by 3.6 per cent from the previous prediction of 3.7 per cent.

Chinese growth helped kickstart the world's economy after the 2008 financial crisis and economists fear the slowdown will put a drag on global growth.

In 2020 Germany is expected to outpace Britain while France will grow at the same rate.

The World Economic Outlook cut the global GDP forecast for this year to 3.5 percent from the 3.7 percent projected in October. A range of triggers beyond escalating trade tensions could spark a further deterioration in risk sentiment with adverse growth implications, especially given the high levels of public and private debt.

"These potential triggers include a 'no-deal" withdrawal of the United Kingdom from the European Union and a greater-than-envisaged slowdown in China, ' the International Monetary Fund said.

Gold prices were reversing last week's bearish close as investor concerns over global growth take a grip following the IMF's stark warnings and what appears to be a mixed picture when it comes to Sino/US trade relation progress, a hot topic in Davos this week.

As the debts roll over, those borrowers have to refinance at higher rates.

Trade tensions and tightening financial conditions in the U.S. and other major economies are the biggest short-term factors in the downward revisions. The unchanged projection relative to the October 2018 WEO reflects the offsetting negative effect of prolonged uncertainty about the Brexit outcome and the positive impact from fiscal stimulus announced in the 2019 budget. The country is slowing just as its leadership tries to turn it into a more modern economy by reducing its reliance on manufacturing and exports and increasing consumer spending. Strong domestic demand growth will support rising imports and contribute to a widening of the United States current account deficit.

The hiring plans suggest that the UK's unemployment rate could drop further from its near-record low of 4.1 per cent.

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