JAKARTA (TheInsiderStories) – The International Monetary Fund (IMF) has stated the global economy recovery is continuing at a faster pace, despite remaining challenges – particularly those stemming from financial market turbulence.
In the latest World Economic Outlook, released on Tuesday (10/10), the fund upgraded its global growth projections to 3.6 percent for this year and 3.7 percent for next year.
The upward revision for the 2017 projection comes on the back of brighter prospects for advanced economies, whereas for 2018’s positive revision, emerging market and developing economies are expected to play a relatively bigger role. IMF projected growth in emerging and developing Asia for both this year and next year could reach 6.5 percent.
The current global acceleration is also notable because it is broad-based—more so than at any time since the start of this decade. This breadth offers the global environment an opportunity for ambitious policies that will support growth and raise economic resilience in the future.
“Policymakers should seize the moment: the recovery is still incomplete in important respects, and the window for action the current cyclical upswing offers will not be open forever,” said the IMF spokesperson in a statement released.
The IMF also raised its outlook for China’s growth this year and next. But the reasons for the upgrade may not all be good: the fund is now assuming a slower rebalancing of the Chinese economy toward services and consumption, as well as a higher debt trajectory and diminished fiscal space to respond to a crisis. All of which, the IMF warns, imply a higher risk of a “sharp” slowdown in China’s growth.
The IMF puts the probability of a recession in Japan in 2018 at just under 40 percent. Still, the risk dropped from a similar projection released in April, and the overall global picture is looking better, with the chance of a downturn also down in the euro area and a group of five big Latin American countries. The risk of a U.S. recession rose slightly from April and now stands at slightly less than 25 percent.
IMF pointed out several global problems requiring multilateral action, such as priorities for mutually beneficial cooperation include strengthening the global trading system, further improving financial regulation, enhancing the global financial safety net, reducing international tax avoidance, and fighting famine and infectious diseases.
The fund also urged the world to mitigate greenhouse gas emissions before they do more irreversible damage, and to help poorer countries—which are not themselves substantial emitters—adapt to climate change.
If the strength of the current upswing makes the moment ideal for domestic reforms, its breadth makes multilateral cooperation opportune. Policymakers should act while the window of opportunity is open.