International Monetary Fund says Nigeria’s economy doing poorly, cuts growth projection

Eileen GuzmanOct 10, 2018

Developing markets, including Turkey, Argentina and several Asian countries, are at risk of a sudden drop off in foreign investor confidence.

But most will continue to experience growth, despite sometimes drastic declines in their currencies, the International Monetary Fund said in its Financial Stability Report, released at its annual meetings in Indonesia.

Most recently, China announced new trade tariffs on $60bn of US goods, including products such as liquefied natural gas, produced in states loyal to the US President Donald Trump.

The latest IMF "World Economic Outlook" report released at the IMF-World Bank Annual Meetings in Bali on Tuesday hints at possible further negative shocks to growth prospects. Beijing has answered with taxes on $110 billion worth of USA exports.

The IMF said the RRR cut, together with other easing and stimulus policies, "may help support economic growth in the near term in the face of rising external pressures.(but) may entail greater risks to financial stability over the medium term should they set back progress toward reducing financial vulnerabilities". The IMF also warned the new government that growth would likely slow and inflation rise further if it does not act fast.

It also noted that "while financial market conditions remain accommodative in advanced economies, they could tighten rapidly if, for example, trade tensions and policy uncertainty were to intensify (and) monetary policy is another potential trigger".

Both projections by the Government and the International Monetary Fund are above 3,1 percent, which sub-Saharan Africa is expected to go by this year.

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.

Trade tensions are expected to continue although Fund officials view US-Mexico-Canada trade agreement as a positive sign.

"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.

He said the talks would be held for "such a programme, a stabilisation, a recovery programme, on which basis we could overcome this financial crisis".

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

The current account deficit widened 43 percent to $18 billion in the year that ended June 30, while the fiscal deficit ballooned to 6.6 percent. The 2019 growth outlook is lower than 5.3 percent and 5.4 percent made in its July and April projections.

China's economy is also showing signs of moderating and that could be exacerbated by its trade disputes with the United States, which has imposed tariffs on $250 billion worth of imports from Beijing and is threatening duties on $267 billion more.

The IMF warned that the world faced a permanent hit to growth if the USA followed through on a threat to impose a 25% on all imported cars, and global tariffs hit business confidence, investment and borrowing costs.

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