International Monetary Fund downgrades outlook for U.S., China as result of trade war

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The IMF expects the USA economy to grow 2.9 percent this year, the fastest pace since 2005 and unchanged from the July forecast.

LCCI President Almas Hyder said government should start immediate consultation with the stakeholders as increase in dollar value would spoil trade and economic activities, besides hitting the common man. In September, Trump imposed tariffs on almost $200 billion of Chinese imports, with China responding with higher tariffs on about $60 billion of US imports.

In a tweet, Mr Trump warned Beijing against seeking to influence the forthcoming USA midterm elections.

The region's slower growth next year mirrors the global growth's similar softening over the medium term.

The latest growth projection was released along with new estimates for global growth or the world output which the International Monetary Fund is now projecting to grow more slowly at 3.7 percent this year and in 2019 because of trade tensions, particularly between the USA and China.

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Downgrades to global growth also reflected predictions of a slower expansion in the eurozone as well as turbulence in a number of emerging market economies.

The IMF also noted the Bangko Sentral ng Pilipinas's (BSP) move to raise policy rates in recent months as headline inflation has risen and the local currency has come under pressure. Citing the impact of US taxes on Chinese imports, however, the International Monetary Fund shaved the outlook for China next year to 6.2 percent, which would be the country's slowest growth since 1990.

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

"Iran and Russian Federation, both faced with USA sanctions, have devised plans to increase trade interaction and ease mercantile regulations", Iran's state-run Tasnim News Agency added.

Mr Obstfeld said the world would become a "poorer and more risky place" unless world leaders worked together to raise living standards, improve education and reduce inequality.

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It also assumes that Trump imposes a 25% tariff on imported cars and auto parts imports. But it predicts that USA growth will slow to 2.5 percent next year as the effect of recent tax cuts wears off and as President Donald Trump's trade war with China takes a toll.

What about the United Kingdom and Brexit?

The Donald Trump administration's trade dispute with China is expected to be front and centre, as are the consequences of the Federal Reserve and other major central banks tightening monetary conditions after a decade of easy money.

Islamabad has cut the size of the biggest Chinese "Silk Road" project in Pakistan, a reconstruction of the main rail line between the port city of Karachi and Peshawar in the northwest by $2 billion, citing government concerns about the country's debt levels.

However, Chancellor Philip Hammond is still expected to borrow around £16bn in 2023 to plug the gap between tax revenues and public spending.

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