IMF says pace of global economic growth is picking up | Daily News

IMF says pace of global economic growth is picking up

The world economy seems to be gaining momentum, according the chief economist of the International Monetary Fund.

Writing in the IMF’s new World Economic Outlook, Maurice Obstfeldt said “we could be at a turning point”.The report forecasts global growth this year of 3.5%, up from 3.1% predicted in 2016.

The UK’s economy is forecast to expand by 2% this year, stronger growth than any of the major developed economies apart from the US.The prediction for Britain this year is now only marginally below what the IMF predicted a year ago, its last full forecast before the Brexit referendum.

The figure then was 2.2%. The revised forecast reinforces the picture of the British economy’s performance being little affected by the aftermath of the referendum, contrary to the expectations of the IMF and many independent economists. The IMF does, however, expect the longer term impact on Britain to be adverse.

The IMF also warns of headwinds that could weaken its global projections. The organisation highlights the possibility of protectionism and what the report calls “trade warfare”.

However, the dominant tone of the report is rather sunnier than it has been for some time. For much of the period since the financial crisis of 2008 the IMF has worried that the recovery was failing to generate momentum. The forecast for this year would be a marked improvement on last year’s 3.1%.

It’s striking that in the forecast for the larger economies, there are none predicted to suffer a decline in economic activity this year or next.Even Brazil and Russia, two countries that have suffered from the fallout of international and domestic political difficulties, are forecast to see growth this year, although it’s not particularly strong.

Inevitably, the IMF identifies possible risks that could weaken its main forecasts. In particular, the report refers to increasing “pressures for inward looking policies in the advanced economies”.

The report notes the loss of what it calls middle-skilled jobs in advanced economies as a result of technological change since the early 1990s. There is controversy about to what extent increased global trade might have contributed to those losses. 


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