International Monetary Fund warns Pakistan against ‘excessive loans’ from China

Govt decides to ‘immediately’ approach IMF

Pakistan to start talks with IMF as rupee continues to fall

China's growth is still expected to be more than 6% next year, but the IMF's chief economist Maurice Obstfeld warned Beijing to concentrate on quality and sustainability of growth, not quantity of growth.

"Historically, Pakistan has achieved 3 to 3.5 percent growth rate in the first two to three years whenever we availed the International Monetary Fund program", Aslam said, adding: "It would be a big achievement if we maintain growth at 3.5 percent".

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.

The global organisation said that India's growth has rebounded from "transitory shocks" such as the demonetisation of high value currency notes and the introduction of the Goods and Services Tax. However the USA, one of the IMF's biggest donors, has raised fears Pakistan could use any bailout money to repay mounting loans from China, sparking criticism from Islamabad.

The IMF expects the U.S. economy to grow by 2.9 per cent and China's by 6.6 per cent this year.

The projected economic growth of the sub-Sahara Africa from 3.1 percent this year to 3.8 percent in 2019 is not enough to create the needed jobs for the growing population of the region, the Fund added.

This is down from its July forecast of 3.9 percent growth for both years.

The United States has imposed tariffs on US$200 billion (S$277 billion) worth of imports from China, attracting retaliatory tariffs from China in return. Over the medium term, growth is expected to gradually slow to 5.6 per cent as the economy continues to make the transition to a more sustainable growth path with continued financial de-risking and environmental controls, it noted.

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Conditions in Europe and other major advanced economies have also remained "relatively easy", although investors have pushed back their expectations for the European Central Bank to lift interest rates, the report said.

"The IMF now expects South Africa's economy to expand 0.8 per cent, down from a forecast of 1.5 per cent in July".

Compared to the projections made in April, the current one for 2018 is lower by 0.1 per cent and for 2019 by 0.4 per cent.

It added, "A high interest burden and risks from rising yields also require continued focus on debt reduction to establish policy credibility and build buffers".

In 2017, India had recorded a 6.7 per cent growth rate.

"These efforts should be supported by further reductions in subsidies and enhanced compliance with the Goods and Services Tax", the International Monetary Fund report said.

While the global economy is still on track to match last year's pace, which was the strongest since 2011, the new outlook suggests fatigue is setting in and the overall performance masked divergence with mounting weakness in emerging markets from Brazil to Turkey.

According to him, the report showed that the negative revisions for emerging markets and developing economies would be more severe, at minus 0.2 and 0.4, respectively.

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