IMF: Global economy to grow by 3.5 per cent

IMF growth downgrade signals urgency for Nigeria policy response

The Global economy is expected to grow by 3.5 per cent this year, and would edge higher to 3.6 per cent by 2018, the International Monetary Fund (IMF), forcasts have indicated.

The world financial body in a release yesterday by its Economic Counsellor and Director of the Research Department, Maurice Obstfeld,  said the momentum in the global economy has been building since the middle of last year, “allowing us to reaffirm our earlier forecasts of higher global growth this year and next. We project the world economy to grow at a pace of 3.5 percent in 2017, up from 3.1 percent last year, and 3.6 percent in 2018.”

Obstfeld said, the growth will be broad based across advanced, emerging, and lowincome economies, building on gains  seen in both manufacturing and trade, adding, “our new projection for 2017 is marginally higher than what we expected in our last update. This improvement comes primarily from good economic news for Europe and Asia, and within Asia, notably for China and Japan.”

He pointed out that despite these signs of strength, many other countries will continue to struggle this year with growth rates significantly below past forecasts.

The IMF chief said many commodity exporters remain challenged – notably in the Middle East, Africa, and Latin America, saying at the same time, a combination of adverse weather conditions and civil unrest threaten several low-income countries with mass starvation.

He said income growth could fall slightly short of population growth in Sub-Saharan Africa,  but assured that this would not be nearly as much as in 2016.

Obstfeld said whether the current momentum will be sustained remains a question mark, but said there are clearly upside possibilities.

Although the IMF chief was optimistic that consumer and business confidence in advanced economies could rise further and that confidence indicators are already at relatively elevated levels, he nevertheless cautioned that the world economy still faces headwinds.

He said: “Several prominent downside risks threaten our baseline forecast.  At the same time, however, U.S. fiscal policy still seems likely to turn more expansionary over the next couple of years.”

He warned that if the degree of remaining slack in the U.S. economy is small, the result could be inflation and a faster than expected pace of interest-rate rises, that could spark sharp dollar appreciation and possible difficulties for emerging and some developing economies—especially those with dollar pegs or extensive dollar-denominated liabilities.

 

CHECK OUT THESE INTERESTING STORIES:

About EZEKIEL ENEJETA 2107 Articles
Ezekiel Enejeta is a graduate of mass communication and a passionate journalist, his flair for writing has led him into pursuing a career in news reporting. He currently serve as the editor of Financial Watch. He can be contacted via phone call at 08141171945