International Monetary Fund raises growth forecasts for euro area

Tuesday, 25 Jul, 2017

The International Monetary Fund (IMF) has revised its forecast on Malaysia's economic growth to 4.8% for 2017 based on favourable economic data so far this year.

Projections for countries including France, Germany, Italy and Spain were increased thanks to better than expected growth figures in the first quarter and indications of "stronger momentum in domestic demand".

U.S. President Donald Trump's failure to push through his promised corporate tax cuts and other pro-business legislation has hindered U.S. growth prospects, according to the outlook.

China's growth will still moderate in 2018 to 6.4 per cent, it said, but that was up 0.2 points from its April forecast because of expectations that Beijing will maintain high public investment.

It upgraded GDP projections for the single-currency area for 2017 to 1.9 per cent, 0.2 points higher than in April.

But he said forecasts for the USA had been revised downwards for 2017 and 2018 to 2.1% growth "as fiscal policy is less likely to be expansionary than expected".

China has set its full-year growth target for 2017 at "around 6.5 percent".

The IMF has raised Brazil's economic growth to 0.3 percent for this year, but cut it to 1.3 percent for 2018.

"Global recovery is on track but the composition is changing as downward revisions in the U.S. and the United Kingdom are offset by positive revisions in emerging markets, Euro Area and Japan", he said.

EPOC's July communique notes that recurrent expenditure for the first two months of the fiscal year fell below budget by $1.1 billion, while capital expenditure was $800 million or 27.7 per cent below budget.

As the United States and China face off over differences on trade policy and North Korea's nuclear weapons program, the International Monetary Fund warned of negative consequences if trade protectionism and geopolitical tensions ignited.

The IMF said that upside and downside risks to the world economy in the near term are broadly balanced.

"As I have said before - what happens in China doesn't stay in China - the spillover to the global economy is very large".

The IMF estimated global growth at 3.4% in 2015 and 3.2% past year.

The IMF also calls out several risks to the global economy that could derail the unfolding pickup.

Fed officials will meet again this week to discuss further rate hikes, but most market observers expect the Fed to delay any further rate increases until the end of this year.

Monetary policy normalization in some advanced economies, notably the U.S., could trigger a faster-than-anticipated tightening in global financial conditions.

Prime Minister Theresa May's spokesman said the IMF's assessment was "one of a number of forecasts".