Published: Ср, Октября 11, 2017
Global | By Maureen Mccoy

International Monetary Fund fails to update United Kingdom growth forecasts amid Brexit uncertainty

International Monetary Fund fails to update United Kingdom growth forecasts amid Brexit uncertainty

In its latest World Economic Outlook, the International Monetary Fund said SA's GDP growth was expected to remain subdued, "despite more favorable commodity export prices and strong agricultural production, as heightened political uncertainty saps consumer and business confidence".

The IMF expects global growth at 3.6 percent in 2017 and 3.7 percent in next year, up 0.1 percentage points from the fund's previous forecast in July.

"A closer look suggests that the global recovery may not be sustainable" and neither policy makers nor markets should be "lulled into complacency", warned Maurice Obstfeld, the IMF's chief economist, in a note accompanying the forecast.

Obstfeld said for 2017, most of the upgrade owes to brighter prospects for the advanced economies, whereas for 2018's positive revision, emerging markets and developing economies play a relatively bigger role. With growth outcomes in the first half of 2017 generally stronger than expected, upward revisions to growth are broad based, including for the eurozone, Japan, China, emerging Europe, and Russian Federation.

The IMF said in a statement on Friday that the Cypriot economy has achieved an impressive turnaround since the 2012-2013 economic and banking crisis but also urged Cyprus to get rid of important legacies from its earlier boom bust cycle to avoid a new crisis.

In July's outlook, the growth forecast for next year was lowered one percentage point to 3.4 per cent from 4.4 per cent in April, owing to an easing of oil growth to 3.2 per cent, compared with 6.2 per cent in the April forecast.

As other advanced nations outpace the United Kingdom, the IMF's new projections show Britain falling from the second fastest G7 economy in 2016 to the third slowest in 2018.

"In the Euro area and Japan, stronger private consumption, investment and external demand bolstered overall growth momentum in the first half of the year".

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Both the Asian Development Bank as well as the Organisation for Economic Cooperation and Development (OECD) have also cut their growth projections for India to 7% and 6.7%, respectively, for fiscal 2017-18.

It forecast a static gross domestic product (GDP) growth of 1.7% this year, slowing further to 1.5% in 2018.

If Korea does reach an economic growth of 3 percent, it would be the first time since 2014.

However, IMF expects India's economy to recover sharply in 2018 to grow at 7.4%, though 30 basis points lower than its earlier estimate in April.

Also yesterday, the Asean+3 Macroeconomic Research Office (AMRO) cut its 2017 growth forecast for the Philippines on account of a first half slowdown.

At the same time, a premature exit by the European Central Bank from its easy monetary-policy stance could derail growth in many European countries.

IMF's 6.7 percent growth rate projection is in line with the Reserve Bank of India's forecast.

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