Published: Tue, July 25, 2017
Economy | By Melissa Porter

Expect Indian growth to pick up in 2017, 2018

Expect Indian growth to pick up in 2017, 2018

The IMF's reassessment of United Kingdom growth forecasts left it less optimistic on the British economy than the Bank of England, which in March lowered its own forecasts to 1.9% growth in 2017, down from 2%.

The forecast was revised up for several eurozone countries, such as France, Germany, Italy and Spain as the growth there in the fist quarter of 2017 was higher than expected.

The dollar fell to its lowest in 14 months last week as investors discounted the ability of President Donald Trump's administration to deliver on its economic agenda after efforts by the Republican Senate to overhaul health care collapsed.

By contrast, projections of most developed economies in the eurozone, Japan and Canada were revised up due to positive activity in late 2016 and early 2017, which helped maintain the 2 percent growth projection for advanced economies.

The 2017 growth projection for China was revised upward 0.1 point to 6.7 percent and that for five Association of Southeast Asian Nations members - Indonesia, Malaysia, the Philippines, Thailand and Vietnam - was raised 0.1 point to 5.1 percent.

The IMF in June shaved its forecasts for United States growth to 2.1 per cent for 2017 and 2018, slightly down from projections three months ago of 2.3 per cent and 2.5 per cent, respectively. Projections for 2017 put South Africa's growth at 1 percent, while Nigeria is expected to muster just 0.8 percent.

The outlook also said the world is relying less than expected on the USA and the United Kingdom, and more on China, Japan, Europe and Canada.

The IMF significantly pared its expectations through 2018 for Saudi Arabia, Brazil and the UK.

The IMF projected that regional growth will rebound to 3.3 percent in 2018, however.

"The recent decline in oil prices, if sustained, could weigh further on the outlook for the region's oil exporters", the International Monetary Fund said.

"While risks balanced in the near term with stronger and more sustained cyclical growth momentum in Europe, where political risks has diminished, downside risks are skewed in the medium term", he added.

Fed officials will meet again this week to discuss further rate hikes, but most market observers expect the Fed to delay any further rate increases until the end of this year.

They stressed that higher environmental taxes and better pricing of externalities in the energy sector can help promote a green, more resilient economy.

More broadly, the International Monetary Fund warns that a more protracted period of policy uncertainty, including for President Trump's fiscal and regulatory policies and the post-Brexit negotiations, could "harm confidence, deter private investment, and weaken growth".

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