Published: Wed, October 11, 2017
World | By Melba Underwood

International Monetary Fund forecasts stronger global growth

International Monetary Fund forecasts stronger global growth

The IMF overturned a summer downgrade to forecast the USA economy would now grow by 2.2% this year, with total world growth expectations rising 0.1% to 3.6% as a "global cyclical upswing" continued.

Globally, the economic picture has brightened a bit, with the world growth for this year projected at 3.6 percent, up from last year's 3.2 percent.

The IMF now predicts South Africa's economy to grow just 0.7% by the end of 2017 - down from original forecasts of 1.0%.

The IMF World Economic Outlook, released on Tuesday, also raised next year's growth to 3 percent, the same as this year's, higher than the 2.8 percent projected in April. Forecasts for eurozone, Japan, China, emerging markets 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.

"Strong government spending and data revisions in India led to an upward revision of 2016 growth to 7.1 per cent (6.8 per cent in April), with upward revisions of about 0.2 percentage point, on average, for 2014 and 2015", it said.

Economic growth in the euro zone was revised upwards from the July forecast by 0.2 percentage points for both 2017 and 2018 to 2.1 percent and 1.9 percent respectively, reflecting an export revival, stronger domestic demand due to accommodative financial conditions and a lowering of political risk.

The IMF's projection is broadly in line with consensus, but significantly more optimistic than the recent 1 per cent growth forecast by the Organisation for Economic Co-operation and Development.

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In August, the International Monetary Fund had said that the Philippines remained an economic standout amid global uncertainties, supported by robust domestic demand and recovery in exports.

"IMF is upbeat about Asia", Lagarde said, adding it was the "fastest growing region".

Inflation is too low in many countries.

Despite the good news, the report comes with a warning that the global recovery is far from complete with weak growth rates still persisting in several countries - particularly among fuel exporters hit by a fall in foreign earnings - and inflation still below the target rates in most advanced economies.

The IMF's forecast for the United Kingdom is the same as in its July report.

The world's lender of last resort said in its latest World Economic Outlook that Brexit uncertainties were continuing to hold the United Kingdom back - maintaining key figures from its summer downgrade.

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

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