IMF: Global Economy Expected to Grow by 3.5%
The International Monetary Fund (IMF) has projected that the global economy is expected to grow by 3.5 per cent this year. Despite the sign of strength, the global lender revealed that many countries will continue to “struggle” in 2017.
“Momentum in the global economy has been building since the middle of last year, allowing us to reaffirm our earlier forecasts of higher global growth this year and next”, Maurice Obstfeld, economic counsellor and director of the International Monetary Fund (IMF) Research Department disclosed.
Similarly, in 2018, the growth is expected to edge higher to 3.6 per cent. “We project the world economy to grow at a pace of 3.5 per cent in 2017, up from 3.1 per cent last year, and 3.6 per cent in 2018”, Obstfeld said.
In addition, “Acceleration will be broad-based across advanced, emerging, and low income economies, building on gains we have seen in both manufacturing and trade”, he said.
The IMF’s new projection for 2017 is marginally higher than what they expected in its last update. This improvement comes primarily from good economic news for Europe and Asia, and within Asia, notably for China and Japan, he explained.
“Despite these signs of strength, many other countries will continue to struggle this year with growth rates significantly below past readings. Commodity prices have firmed since early 2016, but at low levels, and many commodity exporters remain challenged — notably in the Middle East, Africa and Latin America”, Obstfeld said.
“At the same time, a combination of adverse weather conditions and civil unrest threaten several low-income countries with mass starvation. In sub-Saharan Africa, income growth could fall slightly short of population growth, but not by nearly as much as last year”, he said.
Obstfeld said whether the current momentum will be sustained remains a question mark, but said there are clearly upside possibilities.
Although the IMF chief was optimistic that consumer and business confidence in advanced economies could rise further and that confidence indicators are already at relatively elevated levels, he nevertheless cautioned that the world economy still faces headwinds.
According to IMF report, credible strategies were needed in many countries to place public debt on a sustainable path.
“Adjusting to lower commodity revenues and addressing financial vulnerabilities remain key challenges for many emerging market and developing economies. The world also needs a renewed multilateral effort to tackle a number of common challenges in an integrated global economy”, the report said.
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