International Monetary Fund revises up global growth forecast as Europe and Asia pick up

Erica Murray
January 23, 2018

The International Monetary Fund has downgraded its outlook for United Kingdom growth for 2019, the year of Brexit, while much of the rest of the G7 have been upgraded on the back of a strengthening global economy.

In the Middle East, the fund revised up its projections for Saudi Arabia, the world's biggest oil exporter where growth will reach 1.6 per cent in 2018 and 2.2 in 2019 thanks to the recovery in the energy market.

The IMF forecasts the economic growth at the level of 2.2 percent and 2.1 percent in the CIS countries in 2018 and 2019, respectively.

In the U.S., growth forecasts were revised up to 2.7 per cent in 2018 and 2.5 per cent in 2019, 0.4 percentage points and 0.6 percentage points respectively higher than the October projections. That would be the strongest year for global growth since 2011 and represents an upward revision of 0.2 percent since the IMF's forecast in October.

India is projected to grow at 7.4% of its gross domestic product (GDP) in 2018 as against China's 6.8%, the International Monetary Fund (IMF) said Monday, making it the fastest growing economy among emerging economies following last year's slowdown due to demonetisation and the implementation of goods and services tax (GST).

The corporate tax cuts are seen driving investment, which could add growth of 1.2 percent to the USA economy through 2020, while also contributing to the faster expansion in U.S. trading partners like Mexico. "And the ASEAN-5 have gained momentum in response to higher investment and increased exports", Lipton had said. "Purchasing managers' indices indicate firm manufacturing activity ahead, consistent with strong consumer confidence pointing to healthy final demand", the International Monetary Fund said.

Among advanced economies, growth in the third quarter of 2017 was higher than projected in the fall, notably in Germany, Japan, Korea and the US.

Further growth of 3.5% is anticipated in 2019 on the back of a modest upgrade to the growth forecast for Nigeria while not much growth is expected from South Africa. "Financial conditions are quite easy, with booming equity markets, low long-term government borrowing costs, compressed corporate spreads, and attractive borrowing terms for emerging market and developing economies", he said.

It has told policymakers that the current cyclical upswing provides an "ideal opportunity" for reforms.

"A possible trigger is a faster-than-expected increase in advanced economy core inflation and interest rates as demand accelerates", it said. It attributed the accelerating growth to "Modinomics", or economic reforms implemented by Prime Minister Narendra Modi. In an environment of financial market optimism, ensuring financial resilience is imperative, the report said.

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