International Monetary Fund sees India GDP growth at 7.4% in 2018, China's at 6.8%

Gladys Abbott
January 23, 2018

"Global economic activity continues to firm up" and the overall "output is estimated to have grown by 3.7 percent in 2017, which is 0.1 percentage point faster than projected in the fall and 0.5 percent higher than in 2016".

But the changes could also widen the USA trade deficit, strengthen the dollar and affect worldwide investment flows, the IMF said, warning that the benefits of the tax package will be short-lived and that growth in the world's largest economy will slow from 2022 onwards.

Cape Town - Solid growth in advanced economies is expected to propel the world's economy to register strong growth in both 2018 and 2019, the latest IMF World Economic Outlook report has shown.

The study also finds that the tax reform in the United States and the fiscal stimulus that flows from that will also spillover favorably into America's trading partners-particularly Mexico and Canada.

"The primary sources of [global] GDP acceleration so far have been in Europe and Asia, with improved performance also in the United States, Canada, and some large emerging markets, notably Brazil and Russian Federation, both of which shrank in 2016, and Turkey", Obstfeld said.

The International Monetary Fund cut South Africa's economic growth forecast for the next two years on Monday, citing rising political uncertainty that has dented investor confidence.

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In the latest update to the International Monetary Fund 's World Economic Outlook, almost all the forecasts for 2018 and 2019 were revised upward compared to the October edition. Global growth forecasts for 2018 and 2019 have been revised upward by 0.2 percentage point to 3.9 percent. China is already striving to rein in the growth of credit in its economy, a move that will act to slow China's rapid pace of growth. Mexico's economy will be 0.4 points stronger this year and 0.7 points stronger in 2019.

Risks to the global growth forecast appear broadly balanced in the near term, but remain skewed to the downside over the medium term.

On the downside, rich asset valuations and very compressed term premiums raise the possibility of a financial market correction, which could dampen growth and confidence.

"The Bank of England raised its policy rate for the first time since 2008 in view of diminishing slack in the economy and to target inflation driven by the past sterling depreciation", the Washington-based lender said in its report.

The current she stressed remains cyclical and this is the reason why proactive measures must be taken in driving the economies.

At that time the IMF's director general said that the UK's economic performance since the Brexit vote in June 2016 had vindicated the Fund's pre-referendum warnings. In an environment of financial market optimism, ensuring financial resilience is imperative. Markets expect prices to gradually decline over the next 4-5 years.

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