IMF: World economy is picking up speed

WASHINGTON — The world economy is picking up momentum.

The International Monetary Fund on Tuesday raised its forecast for global growth to 3.6 percent this year and 3.7 percent in 2018. For both years, the outlook is up 0.1 percentage points from the IMF's previous forecast in July and would mark the fastest growth since 2010. The world economy grew 3.2 percent in 2016.

Just a year ago, the global economy was still stuck in a slump in the aftermath of the Great Recession of 2007-2009 and a debt crisis in Europe. China's economy was slowing steadily, raising fears of economic fallout in the developing countries that supply raw materials to the world's second biggest economy.

Now the global recovery appears widespread — three-quarters of the globe is enjoying an upswing for the first time this decade — and many of the fears have eased.

The United States, the 19-country eurozone, Japan and China are all forecast to grow faster this year.

World trade is expected to grow 4.2 percent this year, the most in six years.

IMF chief economist Maurice Obstfeld said the sunnier outlook for the United States — 2.2 growth this year versus 1.5 percent in 2016 — did not include any expectations that the U.S. Congress will pass big tax cuts and just reflected healthy U.S. growth in the first half of 2017.

A pickup in investment, industrial production and consumer and business confidence also underpins the improved global outlook.

But lackluster productivity growth and aging populations continue to drag on growth in the world's wealthiest countries. The international lending agency also notes that inflation remains worryingly low, a sign that the world economy still has not returned to full health in the aftermath of the Great Recession of 2007-2009.

China is expected to report faster growth this year for the first time since 2010, easing about collateral damage elsewhere. But the IMF warns that China has taken on high debts to juice growth and advised Chinese authorities to continue a recent effort to limit growth in credit.

In an indirect reference to the election of President Donald Trump in the United States and Britain's decision to leave the European Union, chief economist Obstfeld also warned that growing income inequality within countries has "helped fuel political disenchantment" and a backlash against globalization.

___

This story has been corrected to show that the IMF forecasts for the world economy in 2017 and 2018 predict the fastest growth since 2010, not 2011.

Other News

Home Depot rides housing boom to record sales, profit

Aug 16, 2016

Home Depot posted record sales and earnings during its second quarter and raised its profit expectations for the year as housing market continues to warm up

Dominican leader assumes 2nd term, pledges tech revolution

Aug 16, 2016

The president of the Dominican Republic has been sworn in for a second term as leader of the country boasting the best economic grown in Latin America and the Caribbean

Hawaii sushi chain tied to hepatitis A outbreak tosses food

Aug 17, 2016

A popular restaurant chain in Hawaii that serves sushi on a conveyor belt threw out food and scrubbed its counters Tuesday after state authorities identified its raw scallops as the probable source of a hepatitis A outbreak

The Budget Report seeks to provide comprehensive coverage and analysis on the current economic, financial issues around the world. First hand finance and economic news all day, every day.

Contact us: sales@thebudgetreport.com