Thursday, 26 April, 2018

IMF raises global growth forecast, warns against protectionism

IMF accusations of US protectionism “rubbish” – Trump’s top trade official U.S. Commerce Secretary Wilbur Ross holds a news conference Washington D.C
Melissa Porter | 19 April, 2017, 00:51

Double digit inflation was forecast in several countries, including Nigeria, Angola and Ghana, following a sharp depreciation of their respective currencies in recent months.

Here are three reasons policy makers fear growth might not stick around.

"There are clear downside risks: political uncertainty, including in Europe; the sword of protectionism hanging over global trade; and tighter global financial conditions that could trigger disruptive capital outflows from emerging and developing economies", she warned.

The International Monetary Fund (IMF) increased its forecast for Kazakhstan's GDP growth in 2017.

Meanwhile, the International Monetary Fund held its 2017 USA growth forecast steady at 2.3 percent, which still represents a substantial jump from 1.6 percent growth in 2016, partly due to expectations that President Donald Trump will cut taxes and increase government spending.

The IMF said it is possible short-term growth "could indeed surprise on the upside", if confidence and market sentiment driven by a recovery in commodity prices, buoyant financial markets and deregulation in the US.

Based on its latest World Economic Report (WEO), the International Monetary Fund has a summary ASEAN-5 growth estimate of five percent this year and 5.2 percent in 2018.

The GDP growth forecast for the United Kingdom was also upgraded to two instead of 1.5 percent for this year and to 1.5 instead of 1.4 percent for 2018, while that of Japan was raised to 1.2 instead of 0.8 percent for this year and 0.6 instead of 0.5 percent next year. This was faster than China's 6.7 percent, Vietnam's 6.2 percent, Indonesia's five percent, Malaysia's 4.2 percent, Thailand's 3.2 percent, Singapore's two percent and Taiwan's 1.4 percent.

He said: "The fundamentals of our economy are strong and we continue to invest in the skills needed for a stronger and fairer Britain".

Banking giant Standard Chartered Bank revised upward its GDP growth forecast for the Philippines to 6.8 percent from 6.7 percent, expecting still strong household spending and infrastructure investment to provide strong support for growth this year, similar to 2016.

Among the G7, the USA has the highest projected growth, with increases of 2.3 per cent this year and 2.5 per cent in 2018, unchanged from the IMF's outlook in January.

It said that global growth was a tepid 3.1 per cent in 2016.

In it, Maurice Obstfeld, the IMF's chief economist, said: "One salient threat is a turn towards protectionism, leading to trade warfare". "But we can not adopt unreasonable forecasts or build unjustifiable macroeconomic frameworks". But it said that "inward-looking policies" could derail economic improvements.

The IMF put China growth this year at 6.6 per cent, up a tenth of a point.

In China, while growth has come in above expectations despite efforts to remodel the economy around greater sustainability, Obstfeld said this relied on increases in lending "so rapid it may cause financial stability problems down the road".

The IMF expects India to be the fastest growing major economy in 2017, expanding by 7.2%, despite its rocky demonetization program.