IMF foresees global economy accelerating to 3.5 pct. in '17

Posted April 20, 2017

In its latest World Economic Outlook, the International Monetary Fund said it now expects the British economy to grow by 2% in 2017, up from January's forecast of 1.5%. It also raised its forecast for growth next year to 6.2 percent from the previous 6.0 percent.

Euro area growth forecast for this year was increased to 1.7% from 1.5% and the projection for next year was retained at 1.6%.

Maurice Obstfeld, economic counsellor for the IMF, said: "Mainly in advanced economies, several factors-lower growth since the 2010-11 recovery from the global financial crisis, even slower growth of median incomes, and structural labour market disruptions-have generated political support for zero-sum policy approaches that could undermine worldwide trading relationships, along with multilateral cooperation more generally". Last week, the bank projected last week that the economy will expand by 2.6 per cent this year, up from its prior estimate of 2.1 per cent growth.

Saudi Arabia's growth is forecast to grow at just 0.4 per cent this year, compared with a forecast last October of 2 per cent.

If realized, these projections will roughly sustain the upwardly revised actual 6.9% expansion recorded in 2016, supported by "strong domestic demand and a recovery in exports", International Monetary Fund country representative Shanaka Jayanath Peiris said.

The most recent official forecast in the December budget update was for 2 per cent in 2016-17 followed by 2.75 per cent in 2017-18. In an interview last week with Bloomberg Television, Christine Lagarde said "we see spring in the air of the global economy".

The IMF also said that if the Federal Reserve decides to raise rates at a faster pace, there will be a sharp dollar appreciation, which could hurt emerging economies.

According to the report, growth in China is projected at 6.6 per cent in 2017, slowing to 6.2 per cent in 2018.

"The global economy seems to be gaining momentum - we could be at a turning point", Obstfeld said in a foreword to the outlook.

The IMF report stressed that risks to the outlook "remain tilted to the downside", meaning that while growth could turn out to be faster than expected - particularly if there is a large United States government spending program - there are more negative possibilities on the horizon.

The agency, in its World Economic Outlook report unveiled in Washington, said continued growth in agriculture, rise in oil output and big government spending will drive the nation's growth.

For developing economies and emerging markets, growth was revised downward as a result of weaker overall economic outlooks, weaker trade and oil production cuts, especially in Latin America and the Middle East.