The US-China trade war will hobble global growth, the International Monetary Fund warned Tuesday, cutting its forecast for this year and next and predicting that "everyone is going to suffer" from a clash between the world's two biggest economies.
The International Monetary Fund (IMF) has now projected Pakistan's current account deficit will contract from 5.9 percent of GDP in 2018 (the worst in emerging markets) to 5.3 percent of GDP in 2019 (again the worst in EM).
The IMF expects the USA economy to grow by 2.9 per cent and China's by 6.6 per cent this year.
The projected economic growth of the sub-Sahara Africa from 3.1 percent this year to 3.8 percent in 2019 is not enough to create the needed jobs for the growing population of the region, the Fund added.
It will be detrimental on both accounts for all participants, Lagarde told a news conference during the annual meetings of the International Monetary Fund and World Bank in Indonesian resort island of Bali.
"Owing to these changes, our global growth projections for both this year and next are downgraded to 3.7 per cent, 0.2 percentage point below our last assessments and the same rate achieved in 2017", the report said.
Prominent US academic Jeffrey Sachs was less diplomatic in his assessment of Trump's shepherding of American trade relationships, slamming the president's repeated claims that deficits with China and other nations meant Americans were being taken advantage of. Its forecast for China's 2018 GDP growth remains unchanged at 6.6%, while revised downward by 0.2 percentage points for 2019 to 6.2%.
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Maurice Obstfeld, the IMF's economic counsellor, said at a press conference in Bali, Indonesia, after the report was released, admitted the April forecast was "overoptimistic" and that growth was "less balanced than we hoped".
China will achieve its growth target this year, and debt levels in the economy have stabilized, People's Bank of China (PBOC) Governor Yi Gang said in an exclusive interview with Caixin.
Lagarde said she would meet Pakistani officials on Thursday, with expectations that Islamabad will request a bailout of its shaky economy.
The Federal Reserve, the US central bank, has raised short-term USA rates three times this year as the American economy gains strength more than nine years after the end of the Great Recession. "Any sharp reversal for emerging markets would pose a significant threat to advanced economies".
In Nigeria, he said inflation rate is projected to drop to about 12.4 per cent in 2018, from 16.5 per cent in 2017, before rising to 13.5 per cent in 2019.
The IMF as usual urged emerging economies to accelerate structural reform measures to strengthen their economic fundamentals in the long term.
Core inflation, which excludes volatile items such as energy, will vary from country to country, it added.
Trump has repeatedly touted Wall Street record highs as proof of the success of his policies and confrontational trade strategy, and frequently criticises the Fed for gradually raising interest rates, which could squeeze the brakes on equity markets.