IMF upgrades outlook on Russia as economy recovers The Russian economy will grow faster than previously expected as the macroeconomic outlook improves, the International Monetary Fund (IMF) forecasts.
The IMF expects the United States economy to continue growing this year at 2.9%, but sees that rate falling to 2.5% next year amid the country’s escalating trade war with China.
Prominent US academic Jeffrey Sachs was less diplomatic in his assessment of Trump’s shepherding of American trade relationships, slamming the president’s repeated claims that deficits with China and other nations meant Americans were being taken advantage of.
The rupiah has indeed been under strong downward pressure, especially over the last three months, as a result of monetary tightening and stronger economic growth in the U.S., which has caused higher capital outflows, and the upward trend in worldwide oil prices, which has increased Indonesia’s trade deficit and consequently the current account deficit to more than 2.5 percent of gross domestic product (GDP).
Finance Minister Asad Umar is due to meet officials at this week’s annual conference of the International Monetary Fund and the World Bank in Bali, Indonesia, to discuss a potential package. Trump has justified the higher US tariffs as a response to the trade imbalance between the two countries, and China has swiftly responded with higher levies on USA imports.
When the world’s two biggest economies are “at odds”, Obstfeld said, that is going to create “a situation where everyone is going to suffer”. “This is the United States trying stop China’s growth – it’s a bad idea”, Sachs, director of the Center for Sustainable Development at Columbia University, told a seminar in Bali.
“Risks to global growth skew to the downside in a context of elevated policy uncertainty”.
Broadly speaking, global financial conditions remain accommodative and supportive of near-term growth, albeit somewhat tighter than six months ago.
Adding that “with global public and private debt at an all-time high, any slight change in the wind could provoke capital outflows and economic instability in emerging markets, as we see in some of those markets”.
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 fund urged governments to focus on policies that can share the benefits of growth more widely, helping counter the growing mistrust of institutions, and to avoid “protectionist reactions to structural change”.
United States stimulus also adds to the “already-unsustainable” debt and deficit that will undercut future growth, the report warns.
According to the WEO report, growth is on the mend for sub-Saharan Africa, with the region’s average growth projected to rise to 3.1 per cent in 2018 (from 2.7 per cent in 2017) and 3.8 per cent in 2019.