IMF foresees global economy accelerating to 3.5 pct. in '17

Posted April 26, 2017

Global economic growth will jump in 2017 amid a cyclical recovery in investment, manufacturing and trade, the International Monetary Fund (IMF) said Tuesday.

Growth in the United States will be below the world average, coming in at 2.3 percent in 2017, after a considerably smaller 1.6 percent past year.

The body kept its projection for 2018 unchanged at 3.6 per cent.

Britain's economy is performing better than expected in the wake of Brexit, according to the latest forecast from the International Monetary Fund (IMF).

Inflation, however, is entering a positive course, reaching 1.5% in 2017 and 1.4% in 2018.

Obstfeld said: "Momentum in the global economy has been building since the middle of a year ago".

The IMF raised significantly its forecast for 2017 British growth as the economy performs better than expected since the country voted previous year to quit the European Union.

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World economic growth is set to improve to 3.5% this year from 3.1% in 2016, the Washington-based lender said in its latest World Economic Outlook report.

"The world economy may be gaining momentum, but we can not be sure that we are out of the woods", said Obstfeld. "One salient threat is a turn toward protectionism, leading to trade warfare", Obstfeld said at a media briefing, according to a report from Reuters.

Hardest-hit within the group is Iraq, which had been expected to see 0.5 per cent growth but is now forecast to contract by 3.1 per cent. Also, I.M.F. has predicted 3.9% growth in the year 2018.

The comment came Wednesday in the newest edition of the IMF's Global Financial Stability Report, which also said the financial system has gotten more stable in recent months, as economic growth strengthened and interest rates rose, which helped banks.

But the organisation warned the structural problems of low productivity and high income inequality were likely to persist, and it cited "inward-looking policies" as threatening the global economic order and called for a renewed "multilateral effort".

Investors expect the Chinese government to continue supporting economic growth. However, the post-war system of global economic relations was "under severe strain despite the aggregate benefits it has delivered, and precisely because growth and the resulting economic adjustments have too often entailed unequal rewards".