USA growth outlook may change if Trump's tax reforms don't pass

USA growth outlook may change if Trump's tax reforms don't pass”

On Tuesday the International Monetary Fund raised its forecasts on China's economic growth for this year and 2018, as it expects continued policy support, but warned that there could be disruptions unless the country becomes less reliant on its rapid credit growth, Reuters noted.

In its latest World Economic Update, released today, the fund pushed its growth forecast for 2017 up by 0.1 percentage point to 3.5%, compared to 3.1% a year ago, thanks to positive economic data from Europe and Asia and expectations for higher growth in the US. Growth will rebound to 4.5 percent in 2018, the report said - close to the government's target in its new budget.

Maurice Obstfeld, economic counsellor for the IMF, said: "Mainly in advanced economies, several factors-lower growth since the 2010-11 recovery from the global financial crisis, even slower growth of median incomes, and structural labour market disruptions-have generated political support for zero-sum policy approaches that could undermine worldwide trading relationships, along with multilateral cooperation more generally".

The US economy is projected to grow at 2.3 percent in President Donald Trump's first year in office.

With trade long an important driver of world growth, the International Monetary Fund estimates a surge in tariffs and other trade barriers could sap 2 percentage points off global gross product.

The Washington-based organization continues to estimate Canada's gross domestic product will grow by 1.9 per cent this year, unchanged from its previous forecast. But it said that "inward-looking policies" could derail economic improvements.

The IMF cautioned that its forecasts are "particularly uncertain" because of potential policy changes by the new USA administration.

The growth forecast for China for this year was increased to 6.6% from 6.2%.

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That puts Britain among the fastest growing advanced economies this year, trailing closely behind the United States and Spain, which are expected to grow 2.3% and 2.6%, respectively.

"A strengthening of the USA and global economy.allow us to make some positive assumptions about business conditions for the remainder of our fiscal year", said William Furman, chief executive officer of worldwide railroad giant, Greenbriers Company, based in Lake Oswego, Ore.

"Whether the current momentum will be sustained remains a question mark", Obstfeld explained. These could in turn spill over to other countries.

The IMF said stronger growth is being fueled by a "long-awaited" recovery in investment, manufacturing and trade.

Global trade has fostered "economic miracles" around the world, driving growth and lifting millions out of poverty, he stressed.

Among the factors that could harm economic growth: a protectionist trade agenda, a faster-than-expected rate hike in the USA, and an aggressive rollback of financial regulations, according to the IMF's report.

The U.S. says its policies or threats don't amount to protectionism, but rather are an effort to rebalance distorted trade relationships.

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