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International Monetary Fund chief Lagarde defends rate hikes after Trump slams ‘crazy’ Fed

11 October, 2018, 22:58 | Author: Melinda Barton
  • IMF praises GST for growth

China is in danger of stoking risks to the country's financial stability as policies to avert a growth slowdown amid trade tensions with the USA undercut efforts to reduce threats to the economy stemming from high leverage, the International Monetary Fund (IMF) said in a report released Wednesday.

These policies have contributed to a slowdown in economic growth, which is happening just as trade tensions with the USA are starting to bite. -China tariff war's impact to be felt next year, the fund cut its 2019 USA growth forecast to 2.5 percent from 2.7 percent, while it cut China's 2019 growth forecast to 6.2 percent from 6.4 percent.

The IMF predicted United Kingdom growth to would be 1.4% in 2018, rising to 1.5% in 2019, while the eurozone 2018 growth forecast was cut to 2.0% from 2.2%.

"Considerable progress was made in Russian Federation in recent years to shore up financial stability, including by closing weak banks, introducing reforms to the resolution framework, enacting measures to reduce dollarization, and increasing the risk weights of unsecured consumer and mortgage loans", the International Monetary Fund said.

This week, the finance minister will lead a Pakistani delegation at the annual meeting of the International Monetary Fund (IMF) and World Bank in Bali, Indonesia.

The IMF had in its World Economic Outlook report in July projected that Nigeria's economy would grow by 2.1 per cent in 2018 and 2.3 per cent in 2019.

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

The euro zone's 2018 growth forecast was cut to 2% from 2.2% previously, with Germany particularly hard hit by a drop in manufacturing orders and trade volumes.


The IMF in its World Economic Outlook 2018 noted that "Nigeria's projected economic growth in 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".

"There is no denying that the susceptibility to large global shocks has risen", the IMF's top economist Maurice Obstfeld told reporters.

"It's the combination of the two that is probably showing some of the tensions that we see in terms of indices, short-term indicators as well as possibly market volatility", Lagarde said.

He said the talks would be held for "such a programme, a stabilisation, a recovery programme, on which basis we could overcome this financial crisis".

But China's involvement could also bring potential risks, he said.

"Of the many qualities of Jerome Powell is he's an individual who really understands the plumbing of the US and the global financial system", Carney said.

Much of the global angst has been dominated by Trump's escalating tariff war with China and his disdain for world trading norms.

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