The International Monetary Fund (IMF) has raised its global growth forecast for 2018 and 2019 by 0.2 percentage point to 3.9% due to increased global growth momentum and the expected impact of the recently approved U.S. tax policy changes.
The upward revision was announced on January 22 by Maurice Obstfeld, IMF economic counsellor and director of research, at a press conference on the Update of the World Economic Outlook in Davos, Switzerland.
“This is good news. But political leaders and policymakers must stay mindful that the present economic momentum reflects a confluence of factors that is unlikely to last for long,” warned Obstfeld.
The IMF also revised upward the growth of global output in 2017 to 3.7%, which is 0.1 percentage point faster than that projected in the fall and 0.5 percentage point higher than in 2016. The pickup in growth has been broad based, with notable upside surprises in Europe and Asia.
According to the report, risks to the global growth forecast appear broadly balanced in the near term, but remain skewed to the downside over the medium term.
“The global financial crisis may seem firmly behind us, but without prompt action to address structural growth impediments, enhance the inclusiveness of growth, and build policy buffers and resilience, the next downturn will come sooner and be harder to fight,” Obstfeld reiterated.
The IMF explained that the upward revisions to the global outlook resulted mainly from advanced economies, where growth is expected to exceed 2.0% in 2018 and 2019.
The aggregate growth forecast for emerging markets and developing economies remains unchanged, with marked differences in the outlook across regions.
For emerging and developing Asia, growth will be at around 6.5% over 2018-19, broadly the same pace as in 2017. The region continues to account for over half of world growth.
Growth is expected to moderate gradually in China to 6.6% in 2018 and 6.4% in 2019 from the estimated growth of 6.8% in 2017. India’s economy is expected to pick up to 7.4% in 2018 and 7.8% in 2019 from the estimated 6.7% expansion last year.
For the ASEAN-5 region (Indonesia, Malaysia, Philippines, Thailand, Vietnam), growth is expected to remain broadly stable at 5.3% for 2018-19, unchanged from the 2017 growth pace.
