IMF raises China growth outlook but warns of risk of 'disruptive adjustments'

Barsaba Taglieri
Aprile 19, 2017

"Growth is projected to remain robust at 6.8 percent in 2017 and 6.9 percent in 2018, led by strong domestic demand and a recovery in exports", Shanaka Jayanath Peiris, IMF resident representative to the Philippines, told reporters by email on Tuesday after the release of the World Economic Outlook (WEO) Update report.

As for global growth, International Monetary Fund projects the world economy will grow by 3.5 percent this year versus last year's 3.4 percent, and improve further to 3.6 percent in 2018.

The IMF projects growth in advanced economies to pick up from 1.7 per cent a year ago to two per cent in 2017 ro 2018, raising its forecasts slightly for much of Western Europe, as well as Japan. It's not a huge hike, but it does result in the fastest economic growth rate in five years.

Maurice Obstfeld, IMF's economic counselor and director of the research department, said on Tuesday that momentum in the global economy has been building since the middle of last year, allowing the IMF to reaffirm its earlier forecasts of higher global growth this and next year.

The IMF resident representative also said higher commodity prices will push up inflation to 3.6 percent in 2017, then slightly decelerate to 3.3 percent in 2018.

The IMF's latest outlook for 2017 is a slight upgrade from the 3.4 percent global growth it had forecast in January.

Recent fiscal policy reforms improve Sri Lanka's economic outlook - World Bank Mon, Apr 17, 2017, 11:38 pm SL Time, ColomboPage News Desk, Sri Lanka.

Obstfeld said an anticipated pullback in consumer spending after last year's United Kingdom vote to leave the European Union (EU) had so far failed to materialize.

The institute led by Christine Lagarde revised upwards its forecasts for the USA economy on expectations that fiscal policy will be eased, but it cautioned against the new administration's protectionist views.

The International Monetary Fund (IMF) forecasts 0.8% growth for SA citing a rebound in commodity prices, the dissipation of the drought and the expansions of electricity capacity.

The Bank for International Settlements in September warned excessive credit growth in China is signalling an increasing risk of a banking crisis in the next three years.

"How can countries safeguard and nurture the global recovery?" he said.

"Whereas China's growth remained strong, reflecting continued policy support, activity has slowed in India because of the impact of the currency exchange initiative, as well as in Brazil, which has been mired in a deep recession".

Obstfeld said whether the current momentum will be sustained remains a question mark, but said there are clearly upside possibilities. Consumer and business confidence in advanced economies could rise further ...

"Trade has been an engine of growth, promoting impressive per capita income gains and declines in poverty throughout the world, especially in poorer countries", Obstfeld said.

"This will increasingly make it more hard to transition to a consumer economy if households are already that indebted".

At its first monetary policy review of this fiscal on April 6, the RBI pegged the gross value added (GVA) growth forecast for 2017-18 at 7.4 per cent.

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