Finance

Ghana's economy won't be fastest growing in Africa in 2018

Ghana's economy won't be fastest growing in Africa in 2018

International Monetary Fund chief economist Maurice Obstfeld said global debt levels are very high, threatening repayment problems as central banks prepare to raise interest rates back to normal levels, at a time when many economies face lower medium-term growth rates.

Escalating trade restrictions and retaliation is another risk to the outlook, it said, noting the first shots in a potential trade war involving the USA have now been fired.

The IMF was conceived at a United Nations conference in Bretton Woods in the U.S. in July 1944 to build a framework for economic cooperation to avoid the devaluations that contributed to the Great Depression of the 1930s.

Opposition Leader Andrew Scheer would disagree, but the PhD economists at the International Monetary Fund think Ottawa has some budget room to make investments that would help enhance the economy's ability to grow and create wealth. Its decision-making also reflects members' relative influence. That is about 4.8 per cent of the world's foreign exchange reserves - and bigger than Singapore's reserves, which are the 12th biggest in the world, being valued at around US$282 billion according to Trading Economics.

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Maurice Obstfeld, Economic Counsellor and Director of the Research Department, IMF said that the world economy continues to show broad-based momentum. He repeated a warning the worldwide rules that nurtured "unprecedented" economic growth after World War II are at risk of being "torn apart". "Instead, it is in danger of being torn apart".

That said, Mr Obstfeld describes longer-term prospects as "more sobering".

But trade tensions, such as the United States and China's recent dueling tariff announcements, could take a direct toll on trade and economic activity and also cause financial market turmoil that would tighten financial conditions and hurt confidence.

The global economy is still on an upswing, but the good times may not last beyond the next year or two.

He said the recent tax reform in the USA will make things worse, stating "we now expect the U.S. current account deficit for 2019 will be roughly $150 billion higher", as a result of the tax and spending changes introduced earlier this year. China is expected to expand 6.6% and 6.4% this year and next, while India should grow 7.4% and 7.8%.

The IMF made only modest changes to its forecasts for the UK.

Japan's growth is still seen at a sluggish 1.2% this year, after a rare and large upgrade of five tenths in January, slowing to 0.9% in 2019. Obstfeld said this forecast was a best-case assumption based on a Brexit deal that involved zero tariffs and favourable access to the European Union for the City.

In emerging market and developing economies, in contrast, growth will remain close to its 2018-19 level as the gradual recovery in commodity exporters and a projected increase in India's growth provide some offset to China's gradual slowdown and emerging Europe's return to its lower-trend growth rate, it said.

"Public skepticism about policymakers' ability to generate robust and inclusive growth has spread", Mr Obstfeld said.


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