The May federal budget forecast 3 per cent GDP in 2018-19 and the same the following financial year.
"The government has chose to approach the International Monetary Fund for stabilisation and an economic recovery programme", said the Finance Ministry in a statement after the stock market suffered an over 1,300-point plunge, losing nearly 270 billion Pakistani rupees ($2 billion) of its capitalisation - the highest single-day loss in a decade.
The IMF downgraded the economic growth forecasts for the whole region of the Middle East, North Africa, Afghanistan, and Pakistan, compared to the April edition of the World Economic Outlook, reflecting "to an important extent the worsening of growth prospects for Iran, following the reimposition of United States sanctions", the IMF said in the October outlook. Nor does it meet the third criterion of engaging in persistent, one-sided intervention in the foreign-exchange market, which the US Treasury defines as being when "net purchases of foreign currency are conducted repeatedly and total at least 2 per cent of an economy's GDP over a 12-month period".
"The government has made a decision to do both", he said while addressing a ceremony to launch Naya Pakistan Housing Programme, a flagship project of his government to build 5 million houses in five years for low income people.More news: Majorca Floods: Two Brits Reported Dead After Heavy Rain Sweeps Island
The IMF said in an update to its World Economic Outlook it was now predicting 3.7% global growth in both 2018 and 2019, down from its July forecast of 3.9% growth for both years.
The U.S. and China have imposed higher tariffs on tens of billions of dollars' worth of products the two countries have exported to each other, with no immediate end in sight to the tit-for-tat dispute. That's a significant downgrade from the IMF's assessment in April, when it projected a 3.9 percent growth rate.
Montfort Mlachila, senior resident representative for International Monetary Fund in South Africa, said that countries like Zimbabwe, Eritrea, and Mozambique were facing worrying levels of debt and as the International Monetary Fund they were concerned about the situation in these countries.
The fund kept its forecast for growth in the Chinese economy unchanged at 6.6 percent this year.More news: Trump 'demanding' answers from Saudis on Jamal Khashoggi case
Trade tensions are expected to continue although Fund officials view US-Mexico-Canada trade agreement as a positive sign.
"We are all deeply concerned about this news and the potential impact on the business".
"I'm assuming that there might be a programme request on their part, but that has not been discussed and we will explore that this afternoon", she said.
The effects on the U.S. and China would be particularly severe, with 2019 GDP losses of more than 0.9% in the U.S. and 1.6% in China in 2019. The government has already hiked gas tariff on average by 35 percent and more could follow.More news: Nick Kyrgios rows with umpire during Shanghai Masters first-round exit