IMF maintains growth forecasts; China, euro zone revised higher

KUALA LUMPUR: The International Monetary Fund kept its growth forecasts for the world economy unchanged for this year and next, although it revised up growth expectations for the euro zone and China.
In an updated World Economic Outlook published on Monday, the IMF said global gross domestic product would grow 3.5 per cent in 2017 and 3.6 per cent in 2018, unchanged from estimates issued in April. “While risks around the global growth forecast appear broadly balanced in the near term, they remain skewed to the downside over the medium term,” the IMF said in updated forecasts released in the Malaysian capital, Kuala Lumpur.
The IMF shaved its forecasts for US growth to 2.1 per cent for 2017 and 2018, slightly down from projections of 2.3 per cent and 2.5 per cent, respectively, just three months ago. The Fund reversed previous assumptions that the Trump administration’s planned stimulus measures would boost U.S. growth, largely because no details of those plans have been made public.
Maurice Obstfeld, the IMF’s economic counsellor and director of research, said the global economy has been the subject of considerable protectionist rhetoric, such as President Donald Trump’s proposed tariff on steel imported from China, but such talk had yet to translate into much action.
“What will happen in the future, we don’t know. These threats are in our downside thinking. They’re not built into our baseline (forecast) because hopefully they don’t happen, but there are risks,” Obstfeld told a news conference here.
The IMF said growth in the euro zone was now expected to be slightly stronger in 2018 and pointed to “solid momentum”.
It upgraded 2017 GDP growth projections for the eurozone to 1.9 per cent, up 0.2 percentage point from April. The IMF said eurozone growth would be slightly stronger at 1.7 per cent, a 0.1-percentage-point change from just three months ago. — Reuters