Overall for the global economy, the IMF cut the growth projections made in July for this year and the next by 0.2 per cent to 3.7 per cent, as IMF Chief Economist Maurice Obstfeld warned that "there are clouds on the horizon" and "the likelihood of further negative shocks to our growth forecast has risen".
Thor Equities CEO Joe Sitt on the increasing US trade tensions with China.
The cut its 2019 USA growth forecast to 2.5 percent from 2.7 percent previously, while it reduced China's 2019 growth forecast to 6.2 percent from 6.4 percent.
The body now expects the USA economy to grow at a rate of 2.5 percent in 2019, a 0.2 percentage point decline from its April estimates.
"In the United States, momentum is still strong as fiscal stimulus continues to increase, but the forecast for 2019 has been revised down due to recently announced trade measures, including the tariffs imposed on $200 billion of USA imports from China", IMF report said. That's a significant downgrade from the IMF's assessment in April, when it projected a 3.9 percent growth rate. "Risks to global growth skew to the downside in a context of elevated policy uncertainty".
Both of those figures would mark the slowest rate of expansion for China since 1990, when growth shuddered in the aftermath of the violent suppression of massive Tiananmen Square pro-democracy demonstrations the previous year.
Prime Minister Imran Khan, who took office nearly two months ago, had been exploring alternatives, including a US$2 billion loan from China, to avoid a second International Monetary Fund bailout in five years. Not only will investment and growth suffer but exports will become more competitive due to the enhanced cost of imported ingredients.
Among major USA trading partners, Japan and the European Union have won exemptions from the planned US auto tariffs while respective trade negotiations with Washington are underway.
The Pakistani rupee plunged about 7 percent on Tuesday in an apparent central bank devaluation, while the stock market snapped a six-day skid after the government said it plans to seek a bailout from the International Monetary Fund (IMF).
"Japan's medium-term prospects are impeded by unfavorable demographics and a trend decline in the labor force", the report said. The Shanghai Composite index recovered from early losses to gain 0.1 percent to 2,719.41, after tumbling 3.7 percent on Monday.
The UK economy is expected to expand by 1.4% this year and 1.5% in 2019.
"Healthy consumer spending and job creation amid supportive monetary policy are expected to continue to provide strong aggregate demand, though at a moderating pace", according to the report.
It added that uncertainty in the run-up to the 2019 general election was also negatively impacting growth.
He said the aggregate growth rate of Africa is being held down by its three largest economies.
Still, the trade disputes sparked by President Donald Trump that have led to tit-for-tat exchanges of tariffs among major trading partners are affecting China, other Asian economies and more vulnerable countries like Argentina and Turkey, along with Brazil.