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International Monetary Fund cuts global economic growth target to 3.7%

11 Octobre 2018

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.

The US and China have been at loggerheads for months with the nations locked in a tit-for-tat trade conflict as they continue to slap hefty tariffs on each other. "It's so tight. I think the Fed has gone insane", the USA president said. The S&P 500 fell for the fourth straight day Tuesday while the Cboe Volatility Index, also known as the VIX or Wall Street's fear gauge, neared 16, exceeding this year's average.

In August, for example, regulators told trust companies that they will be allowed to conduct some kinds of channeling business if it served the real economy, easing a crackdown on an opaque activity that makes it hard for regulators to monitor who is actually borrowing money, and enables banks to hide the additional risks they're exposed to.

Eric LeCompte, a financial expert and executive director of Jubilee USA said: "We are seeing growing debt crises in many developing economies, at the same time, we see risky and speculative behaviour on the raise".

"But there is no denying that the susceptibility to large global shocks has risen", Obstfeld said.

"The possibility that China and US resolve their disagreements would be a significant upside to the forecast", Obstfeld said.

Whilst Forbes sees Nigeria's economy as the most performing in Africa in 2018, with good prospects for 2019, International Monetary Fund reports a sluggish growth and perhaps a stunted economy by 2019.

While the banking system is stronger now, new risks have emerged, and "the resilience of the global financial system has yet to be tested", the International Monetary Fund said.

Russian Federation was among the few energy-rich emerging market countries whose growth forecasts were bumped up.

The rapid build-up in debt in China in recent years also is a concern, although Chinese authorities have taken steps to rein in debt growth, he said.

But the U.S. organisation's study stresses that despite the Brexit uncertainty, banks are still safer now than they were in 2008 after the financial crisis.

China and the United States have slapped tit-for-tat tariffs over the past few months, rattling financial markets as investors anxious the escalating trade war could knock global trade and investment.

The effects on the U.S. and China would be particularly severe, with 2019 GDP losses of more than 0.9% in the United States and 1.6% in China in 2019.

In September, the USA implemented another round of tariffs on $200 billion worth of Chinese goods, which were met with countermeasures out of Beijing on $60 billion worth of US goods. The government has already hiked gas tariff on average by 35 percent and more could follow.

International Monetary Fund cuts global economic growth target to 3.7%