Economy

International Monetary Fund joins other multilateral bodies in cutting Philippine growth outlook

International Monetary Fund joins other multilateral bodies in cutting Philippine growth outlook

According to the IMF's report, Canada's economy grew by 1.8 per cent in 2018, 3 per cent in 2017 and 1.1 per cent in 2016.

The WEO noted 3.3 percent expansion is "still reasonable", but warned the outlook for many countries is still "challenging" given the potential for trade disputes to flare up.

"The retreat in part reflects the anticipated negative effects of the tariff increases enacted in 2018", the International Monetary Fund said, referring to the unresolved trade tensions between the United States and China coupled with the unwinding of their fiscal stimulus. The bank's forecast for 2020 was 1.8%, down from 2.0%. Global growth softened to 3.6 percent in 2018 and is projected to decline further to 3.3 percent in 2019. In particular, she highlighted the need for the world's two biggest economies, the United States and China, to find a way to resolve their trade war, which has intensified global economic uncertainty. "Growth in China may surprise on the downside, and the risks surrounding Brexit remain heightened".

"This return is predicated on a rebound in Argentina and Turkey and some improvement in a set of other stressed emerging market and developing economies, and therefore subject to considerable uncertainty", the report says.

In more bad news for Europe's biggest economy, the International Monetary Fund said Germany will now grow just 0.8 per cent in 2019, meaning the organisation has cut its growth prediction for the country by over half since October in two consecutive downgrades.

The IMF lowered its growth forecast for 2019 to 3.3 percent from the previous level of 3.5 percent in its latest World Economic Outlook (WEO).

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The euro area economy lost more momentum than expected as consumer and business confidence weakened and auto production in Germany was disrupted by the introduction of new emission standards; investment dropped in Italy as sovereign spreads widened; and external demand, especially from emerging Asia, softened.

The UK economy will grow by less than previously thought even with a deal, the Washington-based organisation predicted, as it slashed its growth forecasts for all of the world's advanced economies amid a global slowdown. The IMF also cut Japan's growth outlook following a string of natural disasters. The IMF raised its forecast for US growth in 2020 by a tenth of a percentage point to 1.9 per cent.

U.S. tariffs on Chinese imports are hitting Chinese growth and also weighing on Latin America and other areas dependent on Chinese demand for commodities.

Other multilateral lenders such as the also Washington-based World Bank and the Manila-based Asian Development Bank earlier cut their 2019 growth forecasts for the Philippines because of the impasse in Congress on the 2019 national budget, the prolonged dry spell due to El Niño, and a slowing external demand.

For the US, however, upstream tariffs are more important as intermediate imports from China plays a relatively bigger role.

The IMF in the World Economic Report is also projecting an end of year inflation outlook of 8.7 per cent for 2019 after it projected a 9 per cent inflation for end of 2018.