19 April, 2017
The International Monetary Fund (IMF) on Tuesday raised its forecast for global economic growth in 2017, saying buoyant financial markets and a long-awaited cyclical recovery in manufacturing and trade supported the improved outlook.
The world financial body in a release yesterday by its Economic Counsellor and Director of the Research Department, Maurice Obstfeld, said the momentum in the global economy has been building since the middle of last year, "allowing us to reaffirm our earlier forecasts of higher global growth this year and next". Growth will rebound to 4.5 percent in 2018, the report said - close to the government's target in its new budget. At the same time, adverse weather conditions and civil unrest threaten several low-income countries with starvation.
Beijing has said it wants to reorient the economy away from relying on exports and debt-fuelled investment towards a consumer-driven growth model, but the transition has proved challenging and led to slower expansion in recent years.
Nikita Shah, global economist at analyst firm Capital Economics, noted that despite the IMF's previous "optimistic bias", the firm believes its current forecasts for growth are "about right".
Inflation is expected to climb from the present uncomfortably low rate of 1.5 per cent to 2 per cent this year and 2.6 per cent in 2018.
That puts Britain among the fastest growing advanced economies this year, trailing closely behind the USA and Spain, which are expected to grow 2.3% and 2.6%, respectively.More news: Japan protests N. Korean missile test attempt
"Global economic activity is picking up speed, but the potential for disappointments remains high, and momentum is unlikely to be sustained in the absence of efforts by policymakers to implement the right set of policies and avoid missteps", the International Monetary Fund said. It did not specifically mention the Trump administration's "America First" trade agenda aimed at reducing USA trade deficits and turning away more imports.
It said that growth is likely to dip in most Gulf Cooperation Council member states, which also include Bahrain, Kuwait, Oman, Qatar and the United Arab Emirates. The WTO economist said he only sees an acceleration of trade to around 1.5 times the global growth rate.
"Protectionist policies in advanced economies would have an overall negative impact in Asia including the Philippines but the magnitude of impact and channels would depend on the specific policies that are still uncertain", he said. With persistent structural problems - such as low productivity growth and high income inequality - pressures for inward-looking policies are increasing in advanced economies. They also expect President Donald Trump to deliver tax cuts and infrastructure spending that could help boost US economic growth.
However, the foreword to its report contains a series of comments that appear aimed at Donald Trump's rhetoric of protecting American jobs.
The U.S. says its policies or threats don't amount to protectionism, but rather are an effort to rebalance distorted trade relationships.