Trade war escalation could trigger global financial crisis

Trade war escalation could trigger global financial crisis

Trade war escalation could trigger global financial crisis

The International Monetary Fund (IMF) on Tuesday downgraded its outlook for the world economy, warning that the imposition of import tariffs between the United States and China were taking its toll on global trade.

In its latest World Economic Outlook, the organisation downgraded global economic growth to 3.7% for both 2018 and 2019 - 0.2% lower for both years than had been forecast in April.

Nigeria's growth is projected to increase from 0.8 per cent in 2017 to 1.9 per cent in 2018 and 2.3 per cent in 2019 (0.4 percentage point higher than in the April 2018 WEO for 2019), buoyed by the impact of recovering oil production and prices.

The IMF sees Hungary's GDP growth slowing to 3.3 percent in 2019.

After consulting with "leading economists", Pakistan will formally approach the International Monetary Fund for support and Finance Minister Asad Umar will hold talks with officials during the lender's annual meetings in Bali this week, the Finance Ministry said in a statement late Monday.

Although the newly projected rate is same as last year's rate of 3.7 percent, this growth exceeds that achieved in any of the years between 2012 and 2016, and it occurs as many economies have reached or are nearing full employment and as earlier deflationary fears have dissipated.

Khan's government blames the previous administration for the country's economic woes.

"If you have the world's two largest economies at odds, that is a situation in which everyone, everyone is going to suffer", International Monetary Fund chief economist Maurice Obstfeld said Tuesday.

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The IMF also warned the new government that growth would likely slow and inflation rise further if it does not act fast.

The fund left its 2018 USA forecast unchanged but cut its expectation for next year, citing the impact of the trade conflict. Obstfeld, who retires from the Fund later this year, said there were bright spots with some Latin American and African nations getting growth forecast upgrades.

"The continent could do much better once these economies are on the a more solid footings, particularly South Africa and Nigeria because they are really large and affect a number of countries in their neighbourhood".

Moreover, the report says that the inflation in Azerbaijan for 2018 will be 3.5 percent, and then will fall to 3.3 percent in 2019, and to 3 percent - in 2023.

The trade deficit has gone up 8.6 percent this year to $31 billion.

Already the Federal Reserve interest rates hikes are increasing pressure on emerging market economies by fuelling an outflow of capital as investors seek higher returns, while increasing borrowing costs at the same time.

It left 2018 growth forecasts for the two countries unchanged at 2.9 percent for the United States and 6.6 percent for China.

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