Global economic growth is strengthening, thanks to a long-awaited cyclical recovery in investment, manufacturing, and trade, though downside risks remain, the International Monetary Fund said in a report released Tuesday.
World economic growth is set to improve to 3.5 percent this year from 3.1 percent in 2016, the Washington-based lender said in its latest World Economic Outlook report. The forecast was raised from 3.4 percent predicted in October. The projection for next year was left unchanged at 3.6 percent.
The growth forecast for the U.S. for this year was raised to 2.3 percent from 2.2 percent. The outlook for next year was increased to 2.5 percent from 2.1 percent.
The U.S. economy is projected to gather steam as a result of expansionary fiscal policy, the report said.
Euro area growth forecast for this year was increased to 1.7 percent from 1.5 percent and the projection for next year was retained at 1.6 percent.
Growth forecasts for both years for Germany, France and Spain were raised, while they were trimmed for Italy.
One of the biggest to the outlook was for the U.K. that is preparing to leave the European Union. The country's growth projection for this year was sharply lifted to 2 percent from 1.1 percent. However, the forecast for next year was cut to 1.5 percent from 1.7 percent.
Japan's growth outlook for this year was doubled to 1.2 percent from 0.6 percent and the projection for next year was boosted to 0.6 percent from 0.5 percent.
In advanced economies, especially Europe, the cyclical recovery from the crises of 2008-09 and 2011-12 will help keep growth modestly above potential over the next few years, the report said. In the medium term, however, demographic headwinds and weak trend productivity are likely to restrain growth, it added.
The growth forecast for China for this year was increased to 6.6 percent from 6.2 percent. The outlook for next year was raised to 6.2 percent from 6 percent.
In contrast, India's growth forecast for the fiscal year 2017 was reduced to 7.2 percent from 7.6 percent. The projection for next year was left unchanged at 7.7 percent. The country is set to remain the fastest growing economy this year and next.
Brazil was forecast to exit its severe recession and grow a modest 0.2 percent this year and 1.7 percent next year. Mexico's projections were trimmed to 1.7 percent and 2 percent, respectively. Russia's growth forecast for this year and next was raised to 1.4 percent.
For emerging market and developing economies, especially those that rely heavily on energy or metal exports, the adjustment to lower commodity prices remains a key influence on the outlook, the IMF said.
Further, the slowdown of productivity growth in the past few years is also a medium-term challenge for many emerging market and developing economies, the report added.
by RTT Staff Writer
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