Publicado: Vie, Octubre 12, 2018
Financiera | Por Marilu Caballero

International Monetary Fund warns of looming risks to global economy

International Monetary Fund warns of looming risks to global economy

According to the Bretton Woods institution's latest World Economic Outlook Report on World Economy and Financial Surveys, the economic growth will however be higher at 7.6 per cent GDP in 2019 but will gradually dip to about 5.1 per cent GDP by 2023. Indonesia has been swept up in the market turmoil triggered by rising USA interest rates and a stronger dollar, which has pushed the rupiah down 11 percent this year.

The IMF expects the United States economy to continue growing this year at 2.9%, but sees that rate falling to 2.5% next year amid the country's escalating trade war with China.

The IMF warned that China's growth even risked declining by a full percentage point by next year in the event of a "worse-case" scenario, involving further tariffs coupled with a collapse in confidence by businesses and markets.

Acceleration in the growth rate from 2017-18 reflects a rebound from transitory shocks (the currency exchange initiative and implementation of the goods and services tax), with strengthening investment and robust private consumption, the International Monetary Fund said.

U.S. Treasury Secretary Steven Mnuchin is expected to meet with global finance officials in Indonesia this week during IMF and World Bank summits, though as of Monday he had no meetings scheduled with Chinese officials - as reported by Reuters. The International Monetary Fund this week cut its outlook for global growth for the first time since 2016, predicting 3.7 percent expansion this year and next compared with a forecast of 3.9 percent three months ago.

Lagarde also highlighted the increase in trade barriers that could disrupt the performance of global economic growth.

Majorca floods: Two Britons reported among five dead amid 'biblical' scenes
Rescue workers and military units from the Spanish mainland were heading to the area which is popular with British holidaymakers. In December 2016, southern Spain was hit with severe weather, resulting in widespread flooding and several deaths.

The growth rate of United States for 2018 is 2.9 per cent and that of 2019 has been powered to 2.5 per cent.

"Looking ahead, renewed impetus to reform labour and land markets, along with further improvements to the business climate, are also crucial", it said.

The IMF talked about continued capital outflows from emerging market economies and pressure on exchange rates because of monetary normalisation in the US.

It had warned how the USA and China was making the world a "poorer and more unsafe place" as the nations remain locked in a tit-for-tat trade conflict, slapping strings of tariffs on each other.

As interest rates rise in advanced economies, prompting investors to take their money in search of higher returns, the IMF said emerging economies should take steps to insulate themselves from an exodus of funds.

This forecast is a normalization from the current inflation numbers-which the Philippine Statistics Authority (PSA) recently reported was at 6.7 percent in September alone. Systematic compilation of use of public sector balance sheets can lead to lower debt servicing costs and higher return on assets, better management of risks.

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