International Monetary Fund raises forecast for World Economy

Frederick Owens
October 11, 2017

Global economic upswing has strengthened and is broad-based, yet it remains incomplete, the International Monetary Fund said Tuesday, as it raised the growth projections for the world economy for this year and next.

Maurice Obstfeld, IMF Economic Counsellor and Director of Research, said while the global recovery is continuing at a faster pace, the picture is very different from early previous year, when the world economy faced faltering growth and financial market turbulence.

Lesetja Kganyago, Governor of the SA Reserve Bank, said on September 21 that the bank's forecast for GDP growth for 2017 was 0.6%, with forecasts for 2018 and 2019 of 1.2% and 1.5% respectively.

Upward revisions in the eurozone, Japan, emerging Asia, emerging Europe and Russian Federation more than offset downward revisions for the USA and Britain.

Russian economy contracted by 2.8 percent in 2015 and 0.2 percent in 2016 as a result of sagging oil prices and economic sanctions imposed by western countries over Moscow's annexation of Crimea and meddling in Ukraine.

"Growth is expected to soften temporarily to 2.2 per cent in Australia, where housing investment and mining exports in the first half of the year were undermined by bad weather", the report says.

There's also a hint of concern about the administration of President Trump when the report says that "uncertainty about policy is more of a concern than usual reflecting, for example, difficult-to-predict USA regulatory and fiscal policies".

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"This is not bounce back from a sharp deceleration, this is an acceleration from the fairly tepid growth rates of recent years, so that's really good news", International Monetary Fund chief economist Maurice Obstfeld told the Financial Times.

"The current global acceleration is also notable because it is broad-based-more so than at any time since the start of this decade", said Maurice Obstfeld, the organization's economic counsellor and director of research.

The IMF lowered India's forecast growth to 6.7 per cent from the 7.2 per cent predicted in July.

That marked a one tenth of a percentage point upwards revision for each year versus its last set of projections made in July.

Compared with other advanced economies, this growth trajectory is somewhat lackluster.

The IMF is predicting "moderate fiscal tightening" in the United Kingdom as well as Japan.

South Africa slipped into recession earlier this year as rising inflation and high unemployment hit consumer spending, but a rebound in agricultural output has since helped the economy to return to growth. Beyond next year, it said that it expects global growth to increase marginally, reaching 3.8 per cent by 2021.

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