International Monetary Fund downgrades SA's 2018 growth forecast to 0.8%

International Monetary Fund downgrades SA's 2018 growth forecast to 0.8%

International Monetary Fund downgrades SA's 2018 growth forecast to 0.8%

US President Donald Trump recently sanctioned tariffs on an additional Dollars 200 billion worth of Chinese goods, nearly 15 per cent of China's total exports to the US.

He said China's expected 2019 growth is also marked down.

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.

While tax cuts and increased spending have seen an immediate upswing in U.S. growth, the International Monetary Fund warned that the country could face an unwelcome "inflation surprise", which would prompt the Federal Reserve, America's central bank, to hike rates at a faster-than-expected pace.

Rising trade tensions are a key challenge to the world economy as "protectionist rhetoric increasingly turned into action".

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

"No, I don't think it is a problem", Dr Obstfeld said when asked about the issue on the sidelines of a news conference at the International Monetary Fund and World Bank annual meetings in Bali.

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

Overall for the global economy, the IMF cut the growth projections made in July for this year and the next by 0.2 per cent to 3.7 per cent, as IMF Chief Economist Maurice Obstfeld warned that "there are clouds on the horizon" and "the likelihood of further negative shocks to our growth forecast has risen".

The worldwide organization also estimates that over the medium-term, growth in China is expected to slow to 5.6 percent, "as the economy continues to make the transition to a more sustainable growth path with continued financial de-risking and environmental controls", the report said.

USA stimulus also adds to the "already-unsustainable" debt and deficit that will undercut future growth, the report warns.

The possible failure of Brexit negotiations also dampened the eurozone's growth outlook.

Emerging Asia continued to register strong growth, supported by a domestic demand-led pickup in the Indian economy from a four-year-low pace of expansion in 2017, even as activity in China moderated in the second quarter in response to regulatory tightening of the property sector and nonbank financial intermediation, it said.

"It would also make tradable consumer goods less affordable, harming low-income households disproportionately".

When the world's two biggest economies - the United States and China - are "at odds", that is going to create "a situation where everyone is going to suffer", Obstfeld said.

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