The International Monetary Fund (IMF) has maintained its forecast for global economic growth at 3.4% this year, up from 3.1% in 2016, but revised the figures for some of the world’s major economies. Upgrades for the US, Europe and Japan were offset for revisions downwards for Mexico and other major emerging economies.
The IMF now expects the US economy, the world’s largest, to grow by 2.3% this year, against its previous estimate last October of 2.2%, while its forecast for 2018 has been raised to 2.5% from 2.1%. IMF chief economist Maurice Obstfeld cited incoming US president Donald Trump’s proposed tax cut and spending plans as an upside for growth.
It now pencils in 1.5% growth for the UK in 2017 against last October’s forecast of 1.1%, at the same time downgrading the forecast rate for next year to 1.4% from 1.7% previously.
“Preliminary third-quarter growth figures were somewhat stronger than previously forecast in some economies, such as Spain and the United Kingdom, where domestic demand held up better than expected in the aftermath of the Brexit vote,” commented the IMF in its latest World Economic Outlook.
Although China’s economic slowdown is expected to continue, the IMF now expects it to manage 6.5% against its previous forecast of 6.2% based on the likelihood of continued policy stimulus. However, the 2018 figure is projected to cool to 6.0%
Fellow ‘BRIC’ economies Russia and Brazil are expected to move back into positive growth, although the IMF doesn’t foresee it as being strong for either country. It also downgraded India’s growth forecast by 0.4% to 7.2% as consumption in the country has slowed following the government’s demonetisation drive since October 2016.
The biggest revision downwards is for Mexico, which the IMF now expects will see growth of 1.7% this year and 2.0% in 2018, both 0.6% below its previous forecast. Trump has maintained his election pledge to build a wall along the country’s border with the US and to scrap the North American Free Trade Agreement (NAFTA) signed by the two countries and Canada.
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