IMF Raises Global Growth Forecasts

"While the near-term outlook is good, the mid-term outlook is more worrying, and a recession may be nearer than we think", she said while releasing an update to the IMF's global economic outlook here at the World Economic Forum.

Global growth forecast for 2018 and 2019 have been revised upward by 0.2 percentage point to 3.9 per cent.

The IMF maintains its growth prediction for the United Kingdom in 2018 at 1.5% but cuts its forecast for 2019 by one tenth of a percentage point, to 1.5% as well.

The IMF previously projected that GDP would increase by 2.3 percent in 2018 and 1.9 percent in 2019.

International Monetary Fund chief Christine Lagarde today cautioned world leaders against being complacent about economic growth and expressed concern that some developing economies are not sharing the benefits of their growth.

The International Monetary Fund (IMF) on Monday reaffirmed that India's economy is projected to grow by 7.4 percent in the next fiscal year, regaining the rank of the world's fastest-growing large economy as China slows down.

The pickup in growth has been broad based, with notable upside surprises in Europe and Asia.

"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.

The growth forecast for the 19-nation eurozone was revised up 0.3 points to 2.2 percent in 2018 and 0.3 points to 2.0 percent in 2019 due to the stronger momentum in domestic demand and higher external demand.

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. The revision reflects increased global growth momentum and the expected impact of the recently approved U.S. tax policy changes said the report released in Davos at the World Economic Forum.

Sub-Saharan Africa is also expected to record growth with 2018 expected to record a 3.3% growth up from 2.7% in 2017.

The IMF said the current cyclical upswing provides an ideal opportunity for reforms.

China saw a more modest improvement of just one-tenth to 6.6 percent. Mexico's economy will be 0.4 points stronger this year and 0.7 points stronger in 2019.

The risks to the global growth forecast seems to be broadly balanced in the near term, although it remain skewed to the downside over the medium term. A possible trigger is a faster-than-expected increase in advanced economy core inflation and interest rates as demand accelerates.

Firstly, shared growth were policy makers should use these circumstances to make the structural or fiscal reforms that are too hard to make in more difficult times.

  • Eleanor Harrison