Economy

International Monetary Fund reviews Nigeria's growth projection downwards

International Monetary Fund reviews Nigeria's growth projection downwards”

The IMF said it was now predicting 3.7 percent global growth in both 2018 and 2019.

The IMF also cut its outlook for China as a result of the tariffs, shaving its projection for growth next year to 6.2 per cent, down 0.2 point from three months ago.

The fund cut its 2019 USA growth forecast from 2.7 per cent to 2.5 per cent, and the China growth forecast from 6.4 per cent to 6.2 per cent.

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.

Finance Minister Asad Umar left for Indonesia on Monday night to participate in the annual meetings of the International Monetary Fund and World Bank at Bali, scheduled to run until October 12, and formally request a bailout programme, reports Dawn news.

While tax cuts and increased spending have seen an immediate upswing in USA 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. Two weeks after that date, Hungary's Central Statistical Office (KSH) revised first-half GDP growth up 0.1 percentage point to 4.7 percent.

"Nigeria, like many other emerging market countries, has come under market pressure since mid-April".

In particular, the report said global growth would be "significantly" harmed by any further increase in trade tensions.

Global growth is expected to remain steady at 3.7 per cent in 2020, as the decline in advanced economy growth with the unwinding of the USA fiscal stimulus and the fading of the favorable spillovers from USA demand to trading partners is offset by a pickup in emerging market and developing economy growth.

The cut its 2019 U.S. growth forecast to 2.5 percent from 2.7 percent previously, while it reduced China's 2019 growth forecast to 6.2 percent from 6.4 percent.

Japan would see its 2019 growth rate more than halved, from 0.9% to 0.4%, under the worst case scenario.

Elsewhere, the IMF said a key risk to financial conditions was if the Federal Reserve tightened monetary policy faster than market expectations.

Market participants "appear complacent" about the potential risks from a "sudden, sharp tightening of conditions" - like rising interest rates or declining access to capital.

The risk of a global financial crisis initiated by sharp capital outflows in emerging markets due to the divergence of monetary policies in the USA and developing countries remains small but will grow as the Federal Reserve continues to raise its interest rates, as it is expected to do this year and next.

That could mean that Britain will have to raise more taxes in the future because government-owned asset growth will not provide as much support to the economy.

The IMF warned the uncertainty caused by the trade disputes "could lead firms to postpone or forgo capital spending and hence slow down growth in investment and demand".

This is still lower than the global economic growth of 3.7 percent.

Washington has also imposed tariffs on steel and aluminium, citing national security concerns, and has also warned it could impose a 25% levy on imported cars and auto parts.



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