Monday, 22 October, 2018

International Monetary Fund downgrades outlook for world economy to 3.7% growth

Brexit uncertainty weighing on Europe's economy, IMF says, while global growth downgraded Pakistan to start talks with IMF as rupee continues to fall
Ginger Lawrence | 10 October, 2018, 03:45

The Toronto Stock Exchange's S&P/TSX composite index was down 70.78 points, or 0.44 per cent, at 15,875.39.

The Russian economy will grow faster than previously expected as the macroeconomic outlook improves, the International Monetary Fund (IMF) forecasts. These were reduced by 0.2 and 0.4 percentage points for this year and next, partly as a result of higher interest rates making these nations' debts more costly to service.

India's medium-term growth prospects remain strong at 7.75 per cent, benefitting from ongoing structural reform, but have been marked down by just under 0.5 percentage point relative to the April 2018 WEO, the International Monetary Fund said.

"Securing US approval on the IMF Executive Board will require Pakistan to strike a fine geopolitical balance between the Trump administration's concerns over China's growing economic engagement in Pakistan and the country's bilateral commitments", said Bilal Khan, a senior economist at Standard Chartered Plc.

It maintained a 5.3 per cent growth forecast for the Southeast countries in 2018, but lowered the 2019 estimate slightly to 5.2 per cent.

"A catalyst like earnings will give investors something to look forward to but right now it's just a continuation of negative news for equities, with higher yields and slowing global growth", Cardillo said.

For the past few days, the open market rate of the U.S. dollar has been Rs4-5 higher than the interbank rate. It dropped 0.3 percent to $83.91 per barrel in London. The Indian and Sri Lankan rupees both hit record lows.

Maurice Obstfeld, IMF chief economist, said: "US growth will decline once parts of its fiscal stimulus go into reverse".

The IMF maintained a previous forecast for growth of 6.6 per cent for 2018.

Donald Trump publicly swears in Brett Kavanaugh after sexual assault controversy
The latest justice to join the bench, Neil Gorsuch, spoke a year ago during his swearing-in at the White House Rose Garden. He said: "Although the Senate confirmation process tested me as it has tested others, it did not change me".

Tria called for a constructive discussion with Brussels over the budget and said he did not think Italy's deficit forecasts were so shocking.

Jameel Ahmad, global head of Currency Strategy & Market Research at FXTM, said by all accounts, situation for rupee could get much worse before it gets better.

The Nikkei closed down 1.32 per cent this morning at 23,469.39.

Those vast debts have prompted worries from U.S. Secretary of State Mike Pompeo, who warned in July that he would be watching to see if Khan's government uses IMF funds to pay off the opaque Chinese loans.

India hopes to secure a waiver from US sanctions on Iran before they take effect on November 4, as it had significantly cut Iranian oil imports before the deadline, officials said on Monday... Dollar-denominated bonds chalked up solid gains, with many issues adding around 1.5 cents, according to Tradeweb data - their biggest daily gain in several weeks.

CURRENCIES: The dollar slipped to 113.13 yen from 113.21 yen on Monday.

The IMF fears this could lead to sharp falls in markets.

Iranian crude exports, which reach some 2.5 million barrels per day normally, have plunged by over half a million bpd and are expected to dive further when expanded sanctions on oil take effect next month, depriving Tehran of its main source of income.