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IMF projects advanced economies to grow at 1.9% in 2017
17
Jan '17
Advanced economies are projected to grow by 1.9 per cent in 2017 and 2.0 per cent in 2018, 0.1 and 0.2 percentage points more than in the October forecast, respectively, the International Monetary Fund (IMF) has said in its January 2017 update to World Economic Outlook. Growth projections have been revised upward for Germany, Japan, Spain, and the UK.
 
In line with its October 2016 forecast, the IMF estimates global growth for 2016 at 3.1 per cent. However, economic activity in both advanced economies and emerging markets and developing economies (EMDEs) is forecast to accelerate in 2017-18, with global growth projected to be 3.4 per cent and 3.6 per cent, respectively, again unchanged from the October forecasts.
 
For the US, the IMF notes that its forecast is particularly uncertain in light of potential changes in the policy stance under the incoming administration. “The projection for the US is the one with the highest likelihood among a wide range of possible scenarios. It assumes a fiscal stimulus that leads growth to rise to 2.3 per cent in 2017 and 2.5 per cent in 2018, a cumulative increase in GDP of ½ percentage point relative to the October forecast.”
 
Growth projects for 2017 have been revised upward for countries like Japan, Germany, Spain and the UK, mostly on account of a stronger-than-expected performance during the latter part of 2016. These upward revisions more than offset the downward revisions to the outlook for Italy and Korea. However, the primary factor underlying the strengthening global outlook over 2017-18 is the projected pickup in EMDEs’ growth. 
 
Notably, the growth forecast for 2017 has been revised up for China (to 6.5 per cent, 0.3 percentage point above the October forecast) on expectations of continued policy support. “However, continued reliance on policy stimulus measures, with rapid expansion of credit and slow progress in addressing corporate debt, especially in hardening the budget constraints of state-owned enterprises, raises the risk of a sharper slowdown or a disruptive adjustment. These risks can be exacerbated by capital outflow pressures, especially in a more unsettled external environment.”
 
In India, the growth forecast for 2016-17 and next fiscal year have been trimmed by one percentage point and 0.4 percentage point, respectively, primarily due to the temporary negative consumption shock induced by cash shortages and payment disruptions associated with the recent currency note withdrawal and exchange initiative.
 
Growth has also been revised down in Indonesia, reflecting weaker-than-projected private investment, and in Thailand, in light of a slowdown in consumption and tourism. (RKS)
 

Fibre2Fashion News Desk – India


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