International Monetary Fund gives United Kingdom government green light to ease austerity

International Monetary Fund

IMF upgrades forecast for Russia's growth to 1.8% in 2019

The IMF's World Economic Outlook report, unveiled on the eve of its upcoming summit in Bali, Indonesia, estimated that global growth in 2018 would reach 3.7 percent, the same as the previous year but lower than the 3.9 percent it had forecast earlier this year.

Stressing that the International Monetary Fund do not see the recent developments as part of a generalized investor pullback from emerging and frontier markets, Obstfeld said they also do not expect that the current problem cases will necessarily spill over to countries with stronger fundamentals.

That includes President Donald Trump's imposition of tariffs on US$250 billion in Chinese goods, as well as on aluminium, steel and other products worldwide.

The UK economy is expected to grow by 1.4 percent this year - down from April's prediction of 1.6 percent - while predicted growth for 2019 remains at 1.5 percent, a slowdown from 1.7 percent in 2017.

"Trade policy reflects politics and politics remains unsettled in several countries, posing further risks", IMF chief economist Maurice Obstfeld told a press briefing in Bali, where the fund kicks off its annual meetings this week.

The IMF said the balance of risks was now tilted to the downside, with a higher likelihood that financial conditions will tighten further as interest rates normalize, hurting emerging markets further at a time when US-led demand growth will start to slow as some tax cuts expire.

The IMF, created in 1945, is an organization of 189 countries, working to foster global monetary cooperation, secure financial stability, facilitate worldwide trade, promote high employment and sustainable economic growth, and reduce poverty around the world.

However, the Fund is revising its global growth forecast, which is now downgrading from 3.9% to 3.7% for the period 2018-2019.

The United States and China - the world's two biggest economies - are sparring over Beijing's aggressive effort to challenge American technological dominance.

The IMF has slashed its latest growth forecasts, downgrading the US, China, the eurozone and the United Kingdom, as tit-for-tat tariffs bite.

India's medium-term growth prospects remain strong at 7 per cent, benefiting from ongoing structural reform, but have been marked down by just under percentage point relative to the April 2018 WEO, it said.

The IMF said a "no-deal" Brexit remained a risk.

The IMF also took aim at Brexit in its assessment, as it warned how slow progress in thrashing out an European Union divorce deal for Britain is creating "pervasive uncertainty" about future trade costs.

The Washington-based fund said in Nigeria and Angola, tighter monetary policy and moderation in food price increases contributed to tapering inflation.

For Japan, it would be around 0.4 percentage points and 0.2 for the eurozone.

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