IMF Raises Global Growth Forecasts

IMF Raises Global Growth Forecasts

IMF Raises Global Growth Forecasts

According to the IMF's latest report, the world economy is gathering speed with growth forecast for 2018 and 2019 pegged at 3.9 per cent even as it warned that the present economic momentum reflects a "confluence of factors" that is unlikely to last for long.

"Global growth has been accelerating since 2016, and all signs point to a continuous strengthening of that growth", International Monetary Fund managing director Christine Lagarde said during a news conference at the World Economic Forum's annual meeting in Davos, Switzerland.

Growth for 2019 is forecast at 2.0 per cent, up from an earlier projection for 1.7 per cent.

The IMF cited increased investment as businesses take advantage of lower corporate tax rates as it projected US growth to increase to 2.7 per cent this year, from 2.3 per cent in 2017.

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Global economy has been accelerating, but its current recovery is cyclical, International Monetary Fund head Christine Lagarde said.

In 2017, the world experienced increased growth among most G20 nations, with only the United Kingdom and Brazil experiencing slower growth.

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Global growth for 2017 is now estimated at 3.7%, 0.1 percentage point higher than previously projected.

Despite the global GDP growth, she said, one must be cautious as many of those problems that led to the recent recession, remain.

However, the Fund now expects UK GDP growth in 2017 to have come in at 1.7 per cent, slightly higher than the 1.6 per cent it pencilled in last month when it delivered its annual "Article IV" health check on the UK economy. Notably, with a growth rate of 7.

The agency noted that risks to its global outlook were "broadly balanced" in the near term, but skewed to the downside in the medium term. Purchasing managers' indices indicate firm manufacturing activity ahead, consistent with strong consumer confidence pointing to healthy final demand.

But the changes could also widen the USA trade deficit, strengthen the dollar and affect worldwide investment flows, the IMF said, warning that the benefits of the tax package will be short-lived and that growth in the world's largest economy will slow from 2022 onwards.

At first glance, that was but a small change, but it was more notable when compared with the growth predicted for other large advanced economies. 'Firstly, policy makers should use these circumstances to make the structural or fiscal reforms that are too hard to make in more difficult times, ' she said. The increase in fuel prices raised headline inflation in advanced economies, but wage and core-price inflation remain weak.

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