IMF raises global growth forecasts

WASHINGTON — Global economies are recovering simultaneously and at a stronger than expected pace, and will get at least a short-term boost from the US tax cuts, the International Monetary Fund (IMF) said on Monday.

In the latest update to the IMF's World Economic Outlook (WEO), nearly all the forecasts for 2018 and 2019 were revised upward compared to the October edition.

However, the fund warned that exuberant financial markets could be due for a reversal.

The global economy is now expected to grow 3.9 per cent this year and next, two-tenths higher than the previous estimate, and up from growth of 3.7 per cent in 2017.

Advanced economies are seeing solid, simultaneous growth, and the US tax reform passed in December will have a measurable effect, at least for a couple of years.

"The revision reflects increased global growth momentum and the expected impact of the recently approved US tax policy changes," the IMF said.

120 nations see pickup 

"Some 120 economies, accounting for three-quarters of world GDP, have seen a pickup in growth in year-on-year terms in 2017, the broadest synchronised global growth upsurge since 2010."

The WEO upgraded its US Gross Domestic Product forecast by a surprising four-tenths of a point this year to 2.7 per cent, compared to the expected 2.3 per cent in 2017.

For 2019, the IMF increased its US growth forecast a whopping 0.6 points from October, to 2.5 per cent.

Corporate tax cuts are seen driving investment, which could add growth of 1.2 per cent to the US economy through 2020, while also contributing to faster expansion in US trading partners like Mexico, the fund said.