Global economic growth will jump in 2017 amid a cyclical recovery in investment, manufacturing and trade, the International Monetary Fund (IMF) said Tuesday.
The IMF also predicted that the world economy will expand in 2017 by 3.5 per cent, raising its projection by 0.1 percentage points from the the last 2017 estimate in January.
It said that global growth was a tepid 3.1 per cent in 2016.
The IMF kept its forecast for 2018 at 3.6 per cent in Tuesday’s update to the World Economic Outlook, which the Washington-based crisis lender updates quarterly.
“Momentum in the global economy has been building since the middle of last year,” IMF chief economist Maurice Obstfeld said.
“Acceleration will be broad based across advanced, emerging, and low-income economies, building on gains we have seen in both manufacturing and trade.”
Commodity prices have recovered since bottoming out a year ago, relieving global deflationary pressure, the report said.
The World Economic Outlook described financial markets as “buoyant” amid expectations of further stimulus in China, along with fiscal expansion in the United States.
New U.S. President Donald Trump has called for a surge of infrastructure spending, along with tax cuts and reduced regulation.
The IMF said inspite of the more optimistic short-term outlook, longer-term prospects remain impaired by slow productivity improvements and lagging structural reforms that could raise growth prospects in rich countries and improve stability in emerging and developing economies.
The report warned that “inward-looking policies threaten global economic integration and the cooperative global economic order.”
Trump has scuttled US participation in the 12-country Trans-Pacific Partnership trade deal, while Britain is negotiating its exit from the European Union.
The IMF projects growth in advanced economies to pick up from 1.7 per cent last year to two per cent in 2017 ro 2018, raising its forecasts slightly for much of Western Europe, as well as Japan.
Emerging market and developing economies, as a group, are seen growing 4.5 per cent in 2017, up 0.4 points from 2016.
The IMF forecasts growth of 4.8 per cent for the group in 2018.