World

Pakistan says it will seek International Monetary Fund bailout as reserves dwindle

Pakistan says it will seek International Monetary Fund bailout as reserves dwindle

"We have to find a way to get out of this hard situation", Umar 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.

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

The UK economy, meanwhile, is expected to grow 1.4 percent this year and 1.5 percent in 2019 - falling behind nearly all of Europe, with the exception of heavily-indebted Italy.

Growth is projected to slow to 6.6 per cent this year and 6.2 per cent in 2019, a downgrade of 0.2 percentage points. The country's Gross Domestic Product growth rate accelerated to 8.2% in the first quarter of 2018-'19.

It said the global economy will grow 3.7 percent this year, the same as in 2017 but down from the 3.9 percent it was forecasting for 2018 in July.

In the fund's latest Global Economic Outlook, it estimated that the South African economy would grow by 0.8% this year, down from its initial projection of 1.5% in April.

With US GDP growth expected to drop from 2.9 per cent this year to 1.8 per cent by 2020, the International Monetary Fund also warned about the potential risk of an "inflation surprise", fuelled by the same tax cuts and rising spending used to cushion the impact from the trade war.




But the outgoing chief economist - who retires from the Fund later this year - added that it was a "mixed picture" with some Latin American and African nations getting growth forecast upgrades.

Some energy-rich emerging market countries have fared better due to higher oil prices, with Saudi Arabia and Russian Federation receiving upgrades to growth forecasts.

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 normalise, hurting emerging markets further at a time when US-led demand growth will start to slow as some tax cuts expire.

After a visit last week, the IMF issued a report saying Pakistan is facing significant economic challenges, with declining growth, high fiscal and current account deficits, and low levels of global reserves.

ANALYST'S TAKE: "Renewed tension between the US and China has capped risk sentiment as a range of issues from trade to diplomacy are likely to challenge China-US relationship", Zhu Huani of Mizuho Bank said in a commentary. Threats include a further inflaming of the trade war between the U.S and countries including China, and a sharper-than-expected rise in interest rates, which would accelerate capital flight from emerging markets.

The exercise assumes that US President Donald Trump imposes tariffs on the remaining $267 billion worth of Chinese goods imports not already under punitive tariffs and China retaliates in kind.

President Erdogan retaliated by slapping United States exports with heavy tariffs, with extra duties on products such as cars, alcohol and tobacco.


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