WASHINGTON – The International Monetary Fund’s latest forecast leaves world economic growth unchanged at 3.5 percent this year and 3.6 percent next year, with upgrades for Japan, China and emerging Asian markets offsetting a downward projection for the United States.
In an update Sunday to the IMF’s World Economic Outlook published in April, the Washington-based institution revised its forecast for Japan’s growth to 1.3 percent, 0.1 percentage point higher, buoyed by first-quarter growth propelled by personal spending, investment and exports.
The 2017 growth projection for China was revised upward 0.1 point to 6.7 percent and that for five Association of Southeast Asian Nations members — Indonesia, Malaysia, the Philippines, Thailand and Vietnam — was raised 0.1 point to 5.1 percent.
However, the growth forecast for the U.S. was lowered to 2.1 percent for both this and next year — down from 2.3 percent and 2.5 percent, respectively — reflecting a fiscal policy that is expected to be less expansionary than previously anticipated.
The IMF cited “uncertainty about the timing and nature of U.S. fiscal policy changes,” in reference to growing doubts about U.S. President Donald Trump’s ability to promote his stimulus plans in coordination with Congress.
The envisaged stimulus includes a planned overhaul of the nation’s tax system, which features a cut in the corporate tax rate to 15 percent from 35 percent, and Trump’s promised $1 trillion infrastructure spending.
Despite the downward revision to the U.S. economy, IMF chief economist Maurice Obstfeld hailed the steady growth in the world economy, saying the projected global growth rates for 2017 and 2018 are an improvement from 3.2 percent in 2016.
“There is now no question mark over the world economy’s gain in momentum,” Obstfeld said. “Recent data point to the broadest synchronized upswing the world economy has experienced in the last decade.”
He added that world trade growth has also picked up.
At the same time, however, the IMF cautioned that faster than expected monetary policy normalization by the U.S. Federal Reserve could tighten global finance and trigger reversals in capital and investment flows to emerging economies.
According to the updated report, the IMF revised its growth forecast for China up 0.2 point to 6.4 percent in 2018, while leaving its projections unchanged at 0.6 percent for Japan and 5.2 percent for the five ASEAN economies.
The upbeat projection for China, especially for 2018, reflects the expectation that the government will delay needed fiscal adjustments — or maintain high public spending — in a bid to meet its target of doubling the country’s gross domestic product by 2020 from the 2010 level.
Referring to the Southeast Asian economy, the IMF said, “With a pickup in global trade and strengthening domestic demand, growth in the five ASEAN economies is projected to remain robust at around 5 percent.”
Among other countries and regions, the growth forecast for the eurozone was revised upward 0.2 point to 1.9 percent this year and 0.1 point to 1.7 percent next year due to stronger than expected domestic demand.
In a time of both misinformation and too much information, quality journalism is more crucial than ever.
By subscribing, you can help us get the story right.