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International Monetary Fund upgrades outlook on Russian Federation as economy recovers

10 October 2018
International Monetary Fund upgrades outlook on Russian Federation as economy recovers

The Pakistani government has made a decision to approach the International Monetary Fund (IMF) for a bailout to address the mounting balance of payments crisis faced by the South Asian country, Finance Minister Asad Umar announced on Monday.

The Toronto Stock Exchange's S&P/TSX composite index was down 70.78 points, or 0.44 per cent, at 15,875.39. Dow futures lost 0.5 per cent and the S&P 500 futures were down 0.6 per cent. "The negative revisions for emerging market and developing economies are more severe, at -0.2 and -0.4 percentage point, respectively, for this year and next year", Mr. Obstfeld said. The Nasdaq composite lost 0.7 percent to 7,735.95.

Economic growth may accelerate 7 percent in 2023, International Monetary Fund said in its World Economic Outlook 2018, which was released on the Indonesian resort island of Bali on Tuesday. But the fund lowered China's economic outlook for 2019 to 6.2 per cent, which would be the country's slowest growth since 1990.

Pakistan's previous government had set a growth rate target of 6.2 percent for the current fiscal year but global and local institutions predict that the country will not be able to achieve this.

The benchmark USA 10-year Treasury yield climbed to its highest since May 2011 on Tuesday.

The IMF said a high interest burden and risks from rising yields in India also require continued focus on debt reduction to establish policy credibility and build buffers.

The US dollar touched historic high of Rs138 in open market on Tuesday.

The drop should be a positive for exporters and did help Shanghai blue chips edge up 0.3 per cent. Rupee rates to the dollar were Rs98.81, Rs101.78, Rs104.84 and Rs104.85 on 30th of June of 2014, 2015, 2016 and 2017 respectively. The Indian and Sri Lankan rupees both hit record lows.

The country's fifth devaluation since December, taking rupee losses to about 26 percent, had been expected and seen as a prerequisite for another International Monetary Fund rescue package. Overall, global growth will remain steady - about 3.7 percent this year - and exceed that of 2012-2016.

"Thus, policymakers still have an excellent opportunity to build resilience and implement growth-enhancing reforms", Mr. Obstfeld said. EU Commission Vice-President Jyrki Katainen said Italy's situation is vulnerable and negotiations may prove hard.

Japan's benchmark Nikkei 225 fell 1.1 percent to 23,513.20.

A senior U.S. Treasury official on Monday had also expressed concern at the fall in the Chinese yuan, adding that it was unclear whether Treasury Secretary Steven Mnuchin would meet with Chinese officials this week.

The report applied a stress to the USA public sector assets, heavily concentrated in public pension funds, mortgages and student loans, finding that a scenario involving a severe recession, higher long-term interest rates and rapid falls in stock and real estate prices would shrink US public net worth by an equivalent of 26 percent of GDP by 2020.

ENERGY: Benchmark U.S. crude added 31 cents to $74.60 a barrel in electronic trading on the New York Mercantile Exchange.

Iranian crude exports, which reach some 2.5 million barrels per day normally, have plunged by over half a million bpd and are expected to dive further when expanded sanctions on oil take effect next month, depriving Tehran of its main source of income.