World economy perking up

The world economy is picking up momentum.

The International Monetary Fund on Tuesday raised its forecast for global growth to 3.6 per cent this year and 3.7 per cent in 2018. For both years, the outlook is up 0.1 percentage points from the IMF’s previous forecast in July and would mark the fastest growth since 2010. The world economy grew 3.2 per cent in 2016.

Just a year ago, the global economy was still stuck in a slump in the aftermath of the Great Recession of 20072009 and a debt crisis in Europe. China’s economy was slowing steadily, raising fears of economic fallout in the developing countries that supply raw materials to the world’s second biggest

economy. Now the global recovery appears widespread — threequarters of the globe is enjoying an upswing for the first time this decade — and many of the fears have eased.

The United States, the 19-country eurozone, Japan and China are all forecast to grow faster this year.

World trade is expected to grow 4.2 per cent this year, the most in six years.

IMF chief economist Maurice Obstfeld said the sunnier outlook for the United States — 2.2 growth this year versus 1.5 per cent in 2016 — did not include any expectations the U.S. Congress will pass big tax cuts and just reflected healthy U.S. growth in the first half of 2017.

A pickup in investment, industrial production and consumer and business confidence also underpins the improved global outlook. But lacklustre productivity growth and aging populations continue to drag on growth in the world’s wealthiest countries.