International Monetary Fund downgrades outlook for U.S., China as result of trade war

International Monetary Fund downgrades outlook for U.S., China as result of trade war

International Monetary Fund downgrades outlook for U.S., China as result of trade war

After a visit last week, the International Monetary Fund said Pakistan was facing significant economic challenges, with diminishing growth, high budget and current-account deficits, and low foreign-exchange reserves.

The IMF concluded a consultative visit last week with a warning that Pakistan needed to quickly secure "significant external financing" to stave off a crisis, though it did not suggest who could supply the money.

"Looking ahead, clouds appear on the horizon", the report, published at the body's annual meeting in Bali, Indonesia, says.

The yuan currency has faced strong selling pressure this year, losing over 8 percent between March and August at the height of market worries, though it has since pared losses as authorities stepped up support.

The IMF official said the Fund had earlier prompted the government to tinker with Excise taxes on tobacco and alcohol, a policy the government rolled out earlier, but which is under review.

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"An intensification of trade tensions and the associated further rise in policy uncertainty could dent business and financial market sentiment, trigger financial market volatility, and slow investment and trade", the report said.

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

"US growth will decline once parts of its fiscal stimulus go into reverse", Mr Obstfeld said in a statement.

Conditions in Europe and other major advanced economies have also remained "relatively easy", although investors have pushed back their expectations for the European Central Bank to lift interest rates, the report said.

A raising of USA interest rates has also helped send emerging market currencies into a tail spin, as countries that borrowed heavily in dollars race to pay back their debt.

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"Asset valuations appear to be relatively high in some markets, notably in the United States", the International Monetary Fund said Wednesday in its latest Global Financial Stability Report.

The Group of 24 (G-24), a chapter of the G-77, was established in 1971 to coordinate the positions of developing countries on worldwide monetary and development finance issues and to ensure that their interests were adequately represented in negotiations on global monetary matters.

But the USA organisation's study stresses that despite the Brexit uncertainty, banks are still safer now than they were in 2008 after the financial crisis.

It is expected Pakistan will need a bigger sum this year to avoid a balance of payments crisis and stabilise a wobbly economy hurt by a shortage of dollars plus ballooning current account and fiscal deficits.

This comes after the Government also revived upwards growth projection for this year, saying the economy is showing signs of recovery despite a number of challenges and risks.

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