IMF: Economic upswing offers reform opportunities

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Europe

The current broad-based global economic upswing offers an ideal window of opportunity to undertake critical reforms, the International Monetary Fund (IMF) said Tuesday.

In its latest World Economic Outlook, the IMF forecast that the global economy will grow by 3.6 percent in 2017 and 3.7 percent in 2018, both 0.1 percentage point higher than the previous forecast in July. That's an acceleration from the 3.2 percent global growth rate in 2016, which was the lowest since the global financial crisis.

The pick-up in global activities that started in 2016 gathered steam in the first half of 2017, reflecting firmer domestic demand growth in advanced economies and China and improved performance in other large emerging market economies, the IMF said.

"We see an accelerating cyclical upswing boosting Europe, China, Japan, and the United States, as well as emerging Asia," IMF chief economist Maurice Obstfeld said, adding that the current global acceleration is notable "because it is broad-based more so than at any time since the start of this decade."

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The IMF expects the Chinese economy to grow 6.8 percent this year and 6.5 percent next year, both 0.1 percentage point higher than the July forecast.

Growth forecast for the euro area was revised upward from the July projection by 0.2 percentage point to 2.1 percent in 2017 and 1.9 percent in 2018.

The fund also revised up its US growth forecast to 2.2 percent in 2017 and 2.3 percent in 2018, respectively 0.1 and 0.2 percentage point higher than its projection in July.

Zhang Tao, deputy managing director at the IMF, told media Tuesday that the latest outlook confirmed that global recovery was back on track, the result of policymakers using a combination of fiscal policy, monetary policy and structural reforms for a period of time.

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The IMF said the upward revision to China's growth forecast for 2017 reflects the stronger-than-expected performance in the first half of the year, "underpinned by previous policy easing and supply-side reforms."

China's economy expanded by 6.9 percent in the first half of this year, well above the government's yearly target of 6.5 percent.

The upward revision to China's growth forecast for 2018 mainly reflects the expectation that "authorities will maintain a sufficiently expansionary policy mix" to meet their target of doubling the real gross domestic product (GDP) between 2010 and 2020, the IMF said.

While short-term global growth could increase further due to stronger confidence and favorable market conditions, the IMF also warned of the downside risks facing the global economy in the medium term. These include persistently low inflation in advanced economies, financial stability risks in emerging markets, geopolitical tensions and protectionist pressures.

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Source(s): Xinhua News Agency