Global economic recovery outlook gains strength

GLOBAL GROWTH FOR 2016 NOW ESTIMATED AT 3.2%, SLIGHTLY BETTER THAN APRIL 2017 FORECAST

he global economic recovery is gaining strength on improving growth in China, India, Europe and Japan which offset the downward revision for the United States, the International Monetary Fund said in July World Economic Outlook (WEO) update.

Global growth for 2016 is now estimated at 3.2 per cent, slightly stronger than the April 2017 forecast, primarily reflecting much higher growth in Iran and stronger activity in India following national accounts revisions.

Economic activity in both advanced economies and emerging and developing economies is forecast to accelerate in 2017 to 2 per cent and 4.6 per cent respectively, with global growth projected to be 3.5 per cent, unchanged from the April forecast.

2018 growth at 3.6%

The 2018 global growth forecast is unchanged at 3.6 per cent. The revisions reflect primarily the macroeconomic implications of changes in policy assumptions for the world’s two largest economies, the United States and China, as discussed below.

The growth forecast for 2018 is 1.9 per cent for advanced economies, 0.1 percentage point below the April 2017 WEO, and 4.8 per cent for emerging and developing economies, the same as in the spring.

The growth forecast in the United States has been revised down from 2.3 per cent to 2.1 per cent in 2017 and from 2.5

per cent to 2.1 per cent in 2018.

The growth forecast has also been revised down for the United Kingdom for 2017 on weaker-than-expected activity in the first quarter. By contrast, growth projections for 2017 have been revised up for many euro area countries, including France, Germany, Italy, and Spain, where growth for the first quarter of 2017 was generally

above expectations.

China’s growth is expected to remain at 6.7 per cent in 2017, the same level as in 2016, and to decline only modestly in 2018 to 6.4 per cent. The forecast for 2017 was revised up by 0.1 percentage point, reflecting the stronger than expected outturn in the Q1 of the year underpinned by previous policy easing and supply-side reforms.

Growth in India is forecast to pick up further in 2017 and 2018, in line with the April 2017 forecast. While activity slowed following the currency exchange initiative, growth for 2016 — at 7.1 per cent — was higher than anticipated due to strong government spending and data revisions that show stronger momentum in the first part of the year.