Published: Wed, October 11, 2017
World News | By Carolyn Briggs

International Monetary Fund positive on global economic prospects

International Monetary Fund positive on global economic prospects

The growth outlook in the United States was unchanged from the Fund's July report at 2.2 percent for this year and 2.3 percent in 2018, as expected tax cuts under President Trump's administration have not yet materialized.

In new forecasts published today, the organization predicts global growth to be 3.6% this year and 3.7% next year, a small upgrade from previous projections in July.

Forecasts for euro zone, Japan, China, emerging market Europe and Russian Federation were all revised upwards.

"Growth in most of the other advanced economies, with the notable exception of the United Kingdom, picked up in the first half of 2017 from its pace in the second half of 2016, with both domestic and external demand contributing", the International Monetary Fund said.

IMF said given faster-than-expected declines in inflation rates in many larger economies, including India, "the projected level of monetary policy interest rates for the group is somewhat lower than in the April 2017 WEO".

Further, IMF cut India growth forecast for the next year 2018-19 by 30 basis points to 7.4%.

If realised, the growth rate will outdo last year's 6.7 per cent, which was China's slowest pace of expansion since 1990.

More news: Schneiderman To Sue EPA Over Clean Power Plan Repeal
More news: WH Open To Conversation About Banning Bump Stocks
More news: Trump refuses to explain his cryptic 'calm before the storm' statement

"A closer look suggests that the global recovery may not be sustainable" and neither policy makers nor markets should be "lulled into complacency", warned Maurice Obstfeld, the IMF's chief economist, in a note accompanying the forecast.

But its latest forecast is marginally higher than the 1.6 per cent growth pencilled in by the Organisation for Economic Co-operation and Development for this year.

Growth in Turkey is also predicted to speed up to 3.5 percent from 3.3 percent in 2018, according to the report. The fund also sharply reduced its estimate of the UK's long-term growth outlook.

Another UN agency, the Economic and Social Council for Asia and the Pacific (ESCAP), also in May, expected this year's growth rate to be 7.1% before raising to 7.5% next year.

The Fund cautioned that euro zone growth would remain under pressure due to weak productivity, an ageing population and, in some countries, high debt.

The IMF's forecasts are slightly more optimistic than the current consensus, but are unlikely to offer cheer to Philip Hammond, the chancellor, as he travels to Washington for the annual IMF meetings this week.

"While most of the world is sharing in the current upswing, emerging market and low-income commodity exporters, especially energy exporters, continue to face challenges, as do several countries experiencing civil or political unrest, mostly in the Middle East, North and sub-Saharan Africa, and Latin America", said Obstfeld.

Like this: