International Monetary Fund cuts South Africa's growth forecast for next two years

Tuesday, 23 Jan, 2018

Russian Federation is among primary sources of global GDP acceleration along with the United States, Canada, Brazil and Turkey, IMF Economic Counsellor Maurice Obstfeld said on Monday.

In its report, the IMF o said that economic activity in Europe and Asia was surprisingly stronger than expected a year ago, and global growth in 2017 was now estimated to have reached 3.7 per cent, 0.1 point higher than the Fund projected in October.

The WEO upgraded the US GDP forecast by a surprising four-tenths of a point this year to 2.7 percent, compared to the expected 2.3 percent in 2017.

But it forecasts growth in the United Kingdom at 1.5% in each of 2018 and 2019, lagging well behind the average pace of fellow advanced economies - having led the pack as recently as 2016.

The projection is in line with official estimates from the Central Statistics Office, which pegged GDP growth at 6.5 per cent this fiscal. While stronger oil prices are helping a recovery in domestic demand in oil exporters, including Saudi Arabia, the fiscal adjustment that is still needed is projected to weigh on growth prospects.

It estimates the effect on USA growth of the tax cuts will be positive through 2020, accumulating to 1.2% through that year, with a range of uncertainty around its central scenario.

Cape Town - Solid growth in advanced economies is expected to propel the world's economy to register strong growth in both 2018 and 2019, the latest IMF World Economic Outlook report has shown. It further exposes the effect of the last seven years of Tory economic failure.

The fund said that changes to the USA tax code approved in December were responsible for roughly half of the boost to growth. 'Secondly, growth needs to be more inclusive, not just across countries but within countries'. Projected U.S. growth was the highest among advanced economies.

However, survey reports have also pointed to a boost to Britain's manufacturing sector as the weakness of the pound, combined with the strength of the global economy, lifts exports. The latter is forecast to stimulate activity in America and its trading partners, and contribute about half of the cumulative revision to world expansion over 2018-2019, the International Monetary Fund said.

Global economy has been accelerating, but its current recovery is cyclical, International Monetary Fund head Christine Lagarde said. High-frequency hard data and sentiment indicators point to a continuation of strong momentum in the fourth quarter.

At that time the IMF's director general said that the UK's economic performance since the Brexit vote in June 2016 had vindicated the Fund's pre-referendum warnings. Among emerging market economies, headline and core inflation have ticked up slightly in recent months after declining earlier in 2017.