IMF: U.S., U.K. Economy Growth Downgraded
The global economy will remain unchanged the rest of this year and into 2018, according to the July World Economic Outlook Update from the International Monetary Fund (IMF). Despite the stability across the globe, the U.S. and U.K. will grow weaker than previously expected.
“The recovery in global growth that we projected in April is on a firmer footing; there is now no question mark over the world economy’s gain in momentum,” said IMF Chief Economist Maurice Obstfeld in an IMF blog. The July update further cemented the projected global growth at 3.5% this year and 3.6% next year. China, Japan and the eurozone saw revised upward growth.
The IMF revised the U.S. growth forecasts to 2.1% in 2017 and 2018. The reason for this is due to “the weak growth outturn in the first quarter of the year; the major factor behind the growth revision, especially for 2018, is the assumption that fiscal policy will be less expansionary than previously assumed,” said the update. Even with the downgrade, “U.S. growth should remain above its longer-run potential growth rate,” added Obstfeld. The impact of Brexit on the U.K. is still unknown.
In China, “higher growth is coming at the cost of continuing rapid credit expansion and the resulting financial stability risks,” Obstfeld said. Also among emerging and developing economies, India is forecasted to grow in 2017 and 2018. Canada saw the biggest growth prediction in 2017 compared to the April projection. Meanwhile, Sub-Saharan Africa is expected to have some of the largest growth in 2017 and 2018 compared to last year.
“Despite the current improved outlook, longer-term growth forecasts remain subdued compared with historical levels, and tepid longer-term growth also carries risks,” said Obstfeld.
– Michael Miller, editorial associate