International Monetary Fund raises global growth forecast due to increased growth momentum

The growth rate of Pakistan is expected to remain near 6% in the coming year

The upward revision was announced by Maurice Obstfeld, IMF Economic Counsellor and Director of Research, at a press conference on Update of the World Economic Outlook in Davos, Switzerland.

The IMF on Monday forecast global growth of 3.7 percent for 2017, which would be the most substantial annual growth since 2011, and to 3.9 percent for this year and 2019.

Growth forecasts for many euro area economies, especially Germany, Italy, the Netherlands, as well as advanced Asian economies including Japan have been revised up too, reflecting stronger global trade and investment. This growth is expected to continue into 2018 and 2019, as global growth is revised up to 3.9 percent for these two years.

Due to the temporary nature of some of its provisions, the tax policy package is projected to lower growth for a few years from 2022 onwards.

The stronger outlook was attributed to the stronger momentum in domestic demand and higher external demand.

The IMF forecasts the economic growth at the level of 2.2 percent and 2.1 percent in the CIS countries in 2018 and 2019, respectively. "Purchasing managers' indices indicate firm manufacturing activity ahead, consistent with strong consumer confidence pointing to healthy final demand", the International Monetary Fund said.

Earlier in January, a top International Monetary Fund official said that India is reclaiming its place as global growth leader.

Lagarde said while growth is higher, it is mostly cyclical.


"Even as economies return to full employment, inflation pressures remain contained and nominal wage growth is subdued".

The uptick in growth in 2017 was relatively broad-based, with around 120 economies, representing three quarters of world GDP expanding year-on-year last year, "the broadest synchronised global growth upsurge since 2010", the fund said.

Further growth of 3.5% is anticipated in 2019 on the back of a modest upgrade to the growth forecast for Nigeria while not much growth is expected from South Africa.

"The global financial crisis may seem firmly behind us, but without prompt action to address structural growth impediments, enhance the inclusiveness of growth, and build policy buffers and resilience, the next downturn will come sooner and be harder to fight", Obstfeld added.

"Over the medium term, a potential buildup of vulnerabilities if financial conditions remain easy, the possible adoption of inward-looking policies, and non-economic factors pose notable downside risks".

An improving global growth outlook, weather events in the USA, the extension of the Opec+ agreement to limit oil production, and geopolitical tensions in the Middle East have supported crude oil prices.

The IMF estimates for India are slightly better than the World Bank's estimate of 7.3 per cent for the next fiscal year made earlier this month.

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