World economic growth improving, even as U.S., UK potential slows: IMF

REUTERS: The current broad-based global economic upswing will likely be sustained this year and next, the International Monetary Fund said yesterday, with gains in most of the world offsetting sluggish outcomes in the United States, Britain and India.

The IMF upgraded its global economic growth forecast for 2017 by 0.1 percentage points to 3.6 percent, and to 3.7 percent for 2018, from its April and July outlook, driven by a pickup in trade, investment, and consumer confidence.

Forecasts for euro zone, Japan, China, emerging market Europe and Russia were all revised upwards.
The growth outlook in the United States was unchanged from the Fund’s July report at 2.2 percent for this year and 2.3 percent in 2018, as expected tax cuts under President Trump’s administration have not yet materialized.

The U.S. outlook for 2017 had been cut by 0.1 percentage points, and its 2018 forecast had been cut by 0.2 percentage points in the Fund’s April report, but then revised upwards in July by the same amounts.

“Given the significant policy uncertainty, IMF staff’s macroeconomic forecast now uses a baseline assumption of unchanged policies, whereas the April 2017 WEO (World Economic Outlook) built in a fiscal stimulus from anticipated tax cuts,” the Fund said in its revisions to its U.S. economic forecasts.
The U.S. Republican party has presented three tax proposals since Trump took office in January and the latest effort by the Trump administration is already mired in political disagreements in Congress.
The Fund said that over the longer term, U.S. economic growth would moderate due to sluggish productivity growth and changing demographics. It said the economy’s potential growth rate was just 1.8 percent, far lower than the 3.0 percent or more being targeted by Trump and his administration.