Published: Wed, April 19, 2017
Science | By Kerry Wheeler

IMF foresees global economy accelerating to 3.5 pct. in '17

IMF foresees global economy accelerating to 3.5 pct. in '17

Italy is not latching on to the recovery that is strengthening in the rest of the global economy and in particular in other developed countries, and its growth rates remain below those of the major industrial nations, according to new forecasts from the International Monetary Fund (IMF).

In its latest World Economic Outlook report, the International Monetary Fund cut its 2017 growth forecast for the region comprising the Middle East, North Africa, Afghanistan and Pakistan to 2.6 percent, down from the 3.1 percent projected in January.

Notably, the budget estimate for this year's growth is 2.7 percent, and after the downward revision of the 2016 GDP data and delays to the second bailout reform there have been much greater adjustments to Greek growth forecasts for this year by banks and rating agencies.

"At the same time, a combination of adverse weather conditions and civil unrest threaten several low-income countries with mass starvation".

Maurice Obstfeld, economic counsellor for the IMF, said: "Mainly in advanced economies, several factors-lower growth since the 2010-11 recovery from the global financial crisis, even slower growth of median incomes, and structural labour market disruptions-have generated political support for zero-sum policy approaches that could undermine worldwide trading relationships, along with multilateral cooperation more generally". The IMF also forecast that all five of Europe's largest economies will grow even faster. The IMF believes euro zone growth will then slow to 1.6% in 2018.

Banking giant Standard Chartered Bank revised upward its GDP growth forecast for the Philippines to 6.8 percent from 6.7 percent, expecting still strong household spending and infrastructure investment to provide strong support for growth this year, similar to 2016.

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That puts the United Kingdom among the fastest growing advanced economies this year, above France and Germany, whose economies are predicted to grow at 1.4% and 1.6% respectively. The forecast for the unemployment rate remained unchanged.

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

The threat of protectionism is the most worrying, but others include as-yet undetermined U.S. policies and their impact on the global economy, especially the possibility for a rising deficit and tearing down of financial regulations erected in the wake of the 2008 global crisis. "On the other hand, the world economy still faces headwinds", Obstfeld said.

Threats to global trade and integration, however, were given the most emphasis by Obstfeld. Qatar will post 3.4 per cent growth in 2017 and 2.8 per cent in 2018.

Numerous concerns - including rolling back financial regulation, pulling away from the multilateral trading system and restricting immigration - are centerpieces of US President Donald Trump's policy program, but also are issues visible in the bitter French election campaign, as well as in Britain's planned exit from the European Union.

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