Chris Ratcliffe/Bloomberg News
The emergence of protectionist forces could undermine a modest brightening of the global growth outlook and is putting severe strain on the post-World War II economic order, the International Monetary Fund said.
IMF raised its forecast for global growth to 3.5% this year, up 0.1 percentage point from January, the Washington-based fund said in the latest update to its World Economic Outlook. Expansion will pick up to 3.6% in 2018, unchanged from the projection three months ago. The upgrade offers a glimmer of optimism following a trend in recent years of the fund downgrading its growth forecasts.
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The pickup is being fueled by “buoyant” financial markets and a long-awaited cyclical recovery in manufacturing and trade, IMF said. Still, global growth remains subdued compared with past decades, and the risk of “trade warfare” is still hanging over the world economy, IMF chief economist Maurice Obstfeld said.
“The global economy seems to be gaining momentum — we could be at a turning point,” Obstfeld said in a foreword to the outlook. However, “the post-World War II system of international economic relations is under severe strain despite the aggregate benefits it has delivered — and precisely because growth and the resulting economic adjustments have too often entailed unequal rewards,” he added.
The sunnier outlook will hearten finance ministers and central bankers from IMF’s 189 member countries as they meet this week in Washington for the fund’s annual spring meetings. In an interview last week with Bloomberg Television, Christine Lagarde said “We see spring in the air of the global economy.”
| By Andrew Mayeda Bloomberg News |
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