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| Citing Trump Effect, IMF Boosts Gro |
| Citing Trump Effect, IMF Boosts Growth Forecast For United States
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| UNITED STATES OF AMERICA
, 16-January-2017
11:54:56 AM |
| The International Monetary Fund on Monday raised its forecast for the US economy over the next two years, saying President-elect Donald Trump's policies should boost economic growth, particularly in 2018. But officials warned that if Mr Trump's protectionist trade proposals set off a trade war, that could be "quite destructive" for the global economy.
The IMF also increased 2017 growth projections for a number of other countries including China, Germany, Japan and Britain, but warned that the global economy faced a number of downside risks from rising protectionism to a jump in interest rates.
The 189-nation global lending agency's latest economic outlook took note of the significant impact Trump's election has already had in giving a boost to US stock prices, interest rates and the dollar. The new outlook puts US economic growth at 2.3 per cent this year and 2.5 per cent in 2018. That would be an improvement from lackluster US growth around 1.6 per cent in 2016.
During the campaign, Mr Trump said his economic policies of tax cuts, regulatory reform and boosts in infrastructure spending would lift US growth to annual rates of 4 per cent.
The new forecast represents a boost of 0.1 percentage point this year and an increase of 0.4 percentage point for 2018, when Mr Trump's stimulus plans would be expected to be phased in. That is a half-point higher growth than the IMF was forecasting in October, before Mr Trump's election.
In contrast, the World Bank last week left its US forecast unchanged at 2.2 per cent growth in 2017 and 2.1 per cent for 2018, arguing that there was too much uncertainty over the fate of Trump's proposals to incorporate them in a forecast.
But IMF Chief Economist Maurice Obstfeld told reporters at a briefing Monday that he viewed the IMF's upgrade for the United States as a moderate increase that took into account the US election results.
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