IMF updates global economic growth forecast; euro zone and China reviewed


The International Monetary Fund has maintained its world economy’s outlook for the remaining part of this year and next, although it has altered the growth expectations for China and the euro zone. According to the updated World Economic Outlook, the IMF said there would be a 3.5% increase in the global domestic product in 2017 and a 3.6% growth in 2018; this is still by the estimates published in April.

IMF’s updated forecast

In an updated forecasts publicized in Kuala Lumpur, the Malaysian capital, the IMF said that the global growth forecast fears a downward tendency over the medium term, although the risks around the outlook seem to be balanced in the near period.

Just a little down from the highs of 2.3% and 2.5% barely three months earlier, IMF trimmed its forecast for the growth of U.S. to 2.1% for 2017 and 2018. Consequently, the forecast turned around the assumptions the present stimulus measures put in place by the Trump’s administration would yield more and boost the U.S economy because the details of those exciting plans were not announced.

According to the IMF’s economic counselor and director of research, Maurice Obstfeld announced that the global economy had remained the topic for some protectionists. He pointed out Trump’s proposed tariff on steel importation from China which hasn’t yielded any active step.

Obstfeld said that although there are risks, there are also possibilities that they don’t take place. He added that the future is laced with uncertainties. The IMF said that high expectations are that euro zone will experience a slight growth in 2018.

IMF stated that the increase in the euro zone would be large somewhat at 1.7%, indicating a stronger momentum in local demand that envisaged previously. IMF citing poorer activities in the United Kingdom revised its 2017 forecast by 0.3 points down to 1.7%. However, its 2018 forecast remains untampered at 1.5%.

More on the IMF forecast

The IMF said it looks forward to seeing a little higher growth of 1.3% in Japan this year; this is an updated estimate of the previous 1.3 percent in April. However, the 2018 forecast for Japan remains unchanged.

Likewise, IMF forecast up 0.1% from the April forecast to yield a better growth of 6.7% in 2017. It added that the growth of China would moderate to 6.4% in 2018 with Beijing keeping up high levels of public investments.

Obstfeld suggested a possible scenario where China’s economic growth slows down during the second half of the present year in line with the plans of the Chinese authorities to handle non-performing loans and increasing credit growth.

Obstfeld attributed the economic growth recorded in the first two-quarters of 2017 to the trade upsurge in Asia and the overall upsurge in the world growth. However, he pointed out growing domestic credit as one of the leading factors, and that is the part that affects them.