The IMF lowered its global economic growth forecasts for 2018 and 2019, and its 2019 estimates for the United States and China, saying the two countries would feel most of the impact of their trade war next year.
China was set to grow by 6.2 in 2019, down from the 6.4 percent projected last July.
Acceleration in the growth rate from 2017-18 reflects a rebound from transitory shocks (the currency exchange initiative and implementation of the goods and services tax), with strengthening investment and robust private consumption, the International Monetary Fund said.
The fund left its 2018 US forecast unchanged but cut its expectation for next year, citing the impact of the trade conflict. Not only will investment and growth suffer but exports will become more competitive due to the enhanced cost of imported ingredients.
Pakistan's previous government had set a growth rate target of 6.2 percent for the current fiscal year but worldwide and local institutions predict that the country will not be able to achieve this.
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But China's involvement could also bring potential risks, he said.
And it stressed "cooperative solutions" to help boost continued growth in trade "remain essential to preserve and extend the global expansion". The fund downgraded its forecast for US growth next year to 2.5 per cent, down 0.2 percentage point from July, after factoring in the impact of tariffs imposed by the Trump administration and retaliatory duties by other nations.
Global trade tensions would also have a bearing on the eurozone's 2018 growth forecast, which was cut to 2 percent from 2.2 percent previously.
But the U.S. tax cuts and rising spending that have boosted growth, helping compensate for the impact of the growing trade conflict, could spark a sudden "inflation surprise", and in turn lead to faster-than-expected rise in USA interest rates, according to the fund. The Nasdaq Composite dropped 7.44 points, or 0.10 per cent, to 7,728.51 at the opening bell. It said core inflation (excluding all food and energy items) in India had risen to about 6 per cent as a result of a narrowing output gap and pass-through effects from higher energy prices and exchange rate depreciation.
The Pakistani government has also told Beijing it wants to reconsider some of the projects it signed up to under the US$62 billion China-Pakistan Economic Corridor.
The body now expects the US economy to grow at a rate of 2.5 percent in 2019, a 0.2 percentage point decline from its April estimates.