The International Monetary Fund raised on Monday its forecast for economic growth of the united States in the years 2017 and 2018 based on the tax plans of president-elect, Donald Trump, although he cautioned that this will be offset in most part by weaker growth in emerging markets key.
In the update of its World Economic outlook, the IMF maintained its forecasts of global growth for October unchanged at 3.4% for 2017 and 3.6% in 2018, more than 3.1% of the 2016, the year’s weakest since the 2008-2009 financial crisis.
the united States would see a slight improvement of 0.1 percentage point in the gross domestic product (GDP) in 2017 and 0.4 percentage point in 2018, while Trump deploys plans for fiscal measures is expansive, including tax cuts and infrastructure spending.
That would bring the economic growth of the united States to 2.3% in 2017 and to 2.5% in 2018, said the IMF, which also noted that this could boost inflation in an economy that is already close to full employment.
“If a the greater demand driven by the fiscal collides with restrictions more rigid to the capacity, it will be necessary to follow a path more pronounced for interest rates to contain inflation, (while) the dollar to appreciate strongly, the real growth will be lower, the budget pressure will increase and the current account deficit will grow”, commented the chief economist of the IMF, and Maurice Obstfeld, in a statement.
The specialist added that in such a scenario could increase the spectrum of more protectionist measures and responses such as retaliation.
The IMF assumes a stronger dollar, a strengthening in crude oil prices and “more inflationary pressure and a normalization less gradually, of the american monetary policy”.
even Though higher oil prices and of raw materials have improved the outlook for exporters of crude, including Nigeria, the yield curve us steeper and financial conditions more tightly will negatively affect some of the big emerging economies, including Mexico.
China and India. The IMF reduced the growth forecasts for Mexico by 0.6 percentage point both in 2017 and in 2018, also citing uncertainty in investments linked to u.s. policy.
The entity revised its growth forecast for China in 2017, 6.5%, a 0.3 percentage point more than in the estimate for October, based on expectations of continued policy stimulus. However, kept unchanged its forecast for 2018 to a slowdown of 6%.
India, whose recent growth has been one of the fastest in the world, is experiencing an impact to the consumption by the Government’s decision to withdraw from circulation the banknotes of higher denomination, which subtracted a full percentage point to the forecast expansion of the IMF for fiscal year 2016-2017, to 6.6%.
meanwhile, the fund reduced its growth forecast of India for the 2017-2018 fiscal year to 7.2% from 7.6%.
The IMF lifted its forecast for the euro zone and Japan in 2017 by 0.1 percentage point, largely due to performance better than expected in the second half of 2016. The estimate for the Uk was high by 0.4 percentage point, but the 2018 is reduced by 0.3 percentage point.
The IMF said that the risks were to the downside, with potential barriers such as protectionist policies, fiscal conditions more tightly, stress in the banking system in Europe and increased geopolitical tensions.
however, he also noted that there is the potential for surprises to an increase in the growth if the policy stimulus in the united States or China turns out to be higher than currently estimated.
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