International Monetary Fund head: Current recovery of global economy - cyclical

Agence France-Presse

India is projected to grow at 7.4% in 2018 as against China's 6.8%, the International Monetary Fund said today, making it the fastest growing country among emerging economies following last year's slowdown due to demonetisation and the implementation of the GST. In addition, it predicts real GDP in the US will be 1.2 percent higher by 2022 than it would have been without tax reform. She also asked for structural or fiscal reforms and called upon leaders to put together a robust global collaboration to fight corruption, improve conditions for trade, stop tax evasion and prevent catastrophic climate change.

For 2017, it has raised its estimate for global growth by 0.1 percentage points to 3.7 per cent.

It says global economic output is estimated to have grown by 3.7% in 2017, which is 0.1 percentage points faster than projected in October, and 0.5 percentage points higher than projected in 2016. Both predictions are up 0.1 percentage points from the previous forecast in October. While stronger oil prices are helping a recovery in domestic demand in oil exporters, including Saudi Arabia, the fiscal adjustment that is still needed is projected to weigh on growth prospects.

The body also said recently-implemented U.S. tax cuts would stimulate growth, adding 1.2% to the world's biggest economy by 2020 - though due to the temporary nature of the some of the policies it would lower growth from 2022 onwards.

The Tax Cuts and Jobs Act, which was signed into law by President Donald Trump in December, is projected to push GDP growth higher than previously expected.

The revision reflects stronger than expected activity a year ago, higher projected external demand, and the expected macroeconomic impact of the tax reform, in particular the reduction in corporate tax rates and the temporary allowance for full expensing of investment, it said.

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The boost to US growth will be significant.

The IMF also warned that a financial-market correction could spoil the party - a possible scenario it raises amid "rich asset valuations and very compressed term premiums".

At the same time, the International Monetary Fund said the cyclical upswing in global economic activity provides "an ideal opportunity" for countries to undertake structural reforms aimed at boosting productivity and building resilience against downside risks.

It has told policymakers that the current cyclical upswing provides an "ideal opportunity" for reforms.

An improving global growth outlook, weather events in the United States, the extension of the Opec+ agreement to limit oil production, and geopolitical tensions in the Middle East have supported crude oil prices. It's imperative for countries to boost resilience to financial shocks, such as through "proactive" financial regulation, said the fund, which was conceived during the Second World War to oversee the world currency system and has evolved into a lender of last resort to indebted nations.

The IMF further said that Asia will grow at 6.5 percent in 2018-19, which is the same pace as in 2017.

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