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International Monetary Fund forecasts 7.1% economic growth for 2019

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PM Imran Khan chairing the Punjab cabinet meeting. — PTI

Threats include a further inflaming of the trade war between the United States and countries including China, and a sharper-than-expected rise in interest rates, which would accelerate capital flight from emerging markets.

Obstfeld said financial markets have overly emphasised short-term movements in China's currency, adding that the yuan has often quickly recovered from periods of volatility in recent years.

Its chief economist said further trade barriers would hit households, businesses and the wider economy. 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.

In a tweet, Mr Trump warned Beijing against seeking to influence the forthcoming USA midterm elections. An industry source who also tracks exports said October shipments so far were below 1 million bpd.

But it singled out USA president Donald Trump for blame after he imposed tariffs on European Union steel and aluminium and on hundreds of billions of dollars of Chinese trade.

The Philippines' 6.5 percent 2018 projection is the second highest growth estimate in the trade bloc after Vietnam's 6.6 percent.

The IMF said it was now predicting 3.7 percent global growth in both 2018 and 2019, down from its July forecast of 3.9 percent growth for both years.

It said that risks to the short-term outlook had "shifted to the downside". The Shanghai Composite index recovered its losses by 0.2 per cent to 2,721.01, after tumbling 3.7 per cent on Monday.

Argentina, which recently agreed an International Monetary Fund bailout, is also predicted to see its economy shrink in 2018 and 2019.

The IMF chief economist said that while government officials have been moving to rein in China's credit expansion, it was understandable they would take steps to boost growth in the face of trade tensions with the U.S., and these have impacted short-term economic growth, affecting the yuan.

Maurice Obstfeld, the IMF Economic Counsellor, warned against the rising tide of protectionism, saying that without multilateralism "the world will be a poorer and more risky place".

"The challenge for the current government is to ensure that fundamental economic structural reforms are carried out to ensure the that this spiral of being in an International Monetary Fund program every few years is broken once and for all", the finance ministry said. In 2017, India had recorded a 6.7 per cent growth rate.

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.

Rising trade tensions are a key challenge to the world economy as "protectionist rhetoric increasingly turned into action".

The IMF added interest rates would need to be increased to deal with inflation but it warned the Bank of England to be flexible so it could change depending on the situation.

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