IMF raises 2017 global economic growth forecast to 3.6%

Warns against protectionist economic policies

By Babajide Komolafe

The International Monetary Fund, IMF, yesterday, announced an upward review of its forecast for global economic growth in 2017 to 3.6 per cent, citing increased momentum of economic activities around the world.

The Fund, however, warned governments around the world to avoid protectionist economic policies in order ensure that gains of the global economic growth were widespread.

The IMF stated this in the April edition of  its  World Economic Outlook, WEO, released yesterday.

It stated: “Preserving the global economic expansion will also require policymakers to avoid protectionist measures and to do more to ensure that gains from growth are shared more widely.

“Many of the challenges that the global economy confronts call for individual country actions to be supported by multilateral cooperation. Key areas for collective action include preserving an open trading system, safeguarding global financial stability, achieving equitable tax systems, continuing to support low-income countries as they pursue their development goals, and mitigating and adapting to climate change.”

The IMF had earlier predicted in its October 2016 WEO that global economy will grow by 3.1 per cent in 2017.

It, however, noted that: “The world economy gained speed in the fourth quarter of 2016 and the momentum is expected to persist. Global growth is projected to increase from an estimated 3.1 percent in 2016 to 3.5 percent in 2017 and 3.6 percent in 2018”.

It added that while the economic growth forecast for advanced countries have been reviewed upward, that of the emerging countries and developing countries has been reviewed downward.

The IMF stated: “Activity is projected to pick up markedly in emerging market and developing economies because conditions in commodity exporters experiencing macroeconomic strains are gradually expected to improve, supported by the partial recovery in commodity prices, while growth is projected to remain strong in China and many other commodity importers.

“In advanced economies, the pickup is primarily driven by higher projected growth in the United States, where activity was held back in 2016 by inventory adjustment and weak investment.

“Although changes to the global growth forecast for 2017 and 2018 since the October 2016 WEO are small, there have been meaningful changes to forecasts for country groups and individual countries. In line with stronger-than-expected momentum in the second half of 2016, the forecast envisages a stronger rebound in advanced economies. And while growth is still expected to pick up notably for the emerging market and developing economies group, weaker than-expected activity in some large countries has led to small downward revisions to the group’s growth prospects for 2017.

“For advanced economies, projected growth has been revised upward in the United States, reflecting the assumed fiscal policy easing and an uptick in confidence, especially after the November elections, which, if it persists, will reinforce the cyclical momentum. The outlook has also improved for Europe and Japan based on a cyclical recovery in global manufacturing and trade that started in the second half of 2016.

“The downward revisions to growth forecasts for emerging market and developing economies result from a weaker outlook in several large economies, especially in Latin America and the Middle East, reflecting continued adjustment to the decline in their terms of trade in recent years, oil production cuts, and idiosyncratic factors.

The 2017 and 2018 growth forecasts have been marked up for China, reflecting stronger-than-expected policy support, as well as for Russia, where activity appears to have bottomed out and higher oil prices bolster the recovery.”

 

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