IMF raises global growth forecast for 2018 and 2019
DAVOS: The International Monetary Fund (IMF) on Monday revised up its forecast for world economic growth in 2018 and 2019, saying sweeping US tax cuts were likely to boost investment in the world’s largest economy and help its main trading partners.
However, the IMF, in an update of its World Economic Outlook, also added that US growth would likely start weakening after 2022 as temporary spending incentives brought about by the tax cuts began to expire.
The tax cuts would likely widen the US current account deficit, strengthen the US dollar and affect international investment flows, IMF chief economist Maurice Obstfeld said.
“Political leaders and policymakers must stay mindful that the current economic momentum reflects a confluence of factors that is unlikely to last for long,” Obstfeld told reporters at the World Economic Forum in Davos.
He said economic gains from the tax cuts would be partially paid back later in the form of lower growth as temporary spending incentives, notably for investment, expired and as rising federal debt took a toll.