Maurice Obstfeld said the International Monetary Fund does not see a generalised pullback from emerging markets, nor contagion that will spill over to those emerging economies which have stronger economies and have thus far avoided major outflows, such as those in Asia and some oil exporting countries.
The financial market volatility will likely continue next year, because the US Federal Reserve, after raising the federal funds rate by 25 basis points in its September 26 meeting, nonetheless signaled another rate hike by the end of this year and maintained its projection for three rate hikes in 2019.
In May, before US President Donald Trump announced reinstating sanctions against Tehran, the International Monetary Fund had projected Iran's economy would grow by 4.0 percent in 2018 and again next year. For FY20, the Chinese economic growth rate was cut by 0.2 percentage points to 6.2 per cent.
"The downward revisions reflect to an important extent the worsening of growth prospects for Iran, following the re-imposition of United States sanctions", it said. It also listed risks such as higher oil prices, global trade tension and the impact of higher USA interest rates and volatile capital flows on borrowing costs over the short term. Overall, global growth will remain steady - about 3.7 percent this year - and exceed that of 2012-2016. Actual inflation number was only 2.9 percent in 2017.
The trade deficit has gone up 8.6 percent this year to $31 billion. Not only have some downside risks that the last World Economic Outlook identified been realised, the likelihood of further negative shocks to our growth forecast has risen. The IMF has lowered the growth projections for both India and China by 0.4 per cent and 0.32 per cent, respectively, from its annual April's WEO.
It also predicted that unemployment here will fall to 5.3% by the end of this year and 5.1% next year.
The repercussions for the United States and China would be particularly severe, with 2019 GDP losses of more than 0.9 percent in the United States and 1.6 percent in China in 2019.
Rand strengthens as Nhlanhla Nene flies to International Monetary Fund meeting
Former central bank chief Tito Mboweni will take over from Nene. "I deeply regret these lapses and beg your forgiveness". Questions have also been raised about a PIC deal involving Nene's son, while he was chairman of the PIC.
The Philippines' 6.5 percent 2018 projection is the second highest growth estimate in the trade bloc after Vietnam's 6.6 percent.
"Growth performance varies, however, across countries".
Output could fall by more than 1.6 per cent in China and over 0.9 per cent in the U.S. next year, according to the IMF's models.
If the trade war continues, it could take a significant bite out of global growth, according to the fund.
Developing markets, including Turkey, Argentina and several Asian countries, are at risk of a sudden drop off in foreign investor confidence.
The IMF's World Economic Outlook report, unveiled on the eve of its upcoming summit in Bali, Indonesia, estimated that global growth in 2018 would reach 3.7 percent, the same as the previous year but lower than the 3.9 percent it had forecast earlier this year.
During the current election campaigning period, the longest the country has ever seen, everything tends to be seen through the prism of politics.