The global economy should continue to grow, according to the IMF

Photo: Jim Watson, Agence France-Presse
The institution of Washington points out, however, that the temptation of protectionism could undermine global growth.

The IMF was more optimistic Tuesday about the global growth by raising its forecast, but urged the countries to put the cap on the reforms to establish a sustainable recovery in the face of the persistence of multiple risks.


After rising 3.2% in 2016, the gross domestic product (GDP) worldwide is expected to accelerate to 3.6 % this year and 3.7% next year, a slight improvement of 0.1 point compared to the previous forecast of July, indicates the international monetary Fund (IMF) in its half-yearly report on the global economy.


“The global recovery continues, and at a faster pace,” says the chief economist of the IMF, and Maurice Obstfeld, noting that ” the photograph [of global economy] is very different from last year when the global economy was facing a growth faltering and turmoil in the financial markets “.


The countries of the euro area, China, Japan, Canada and the United States have contributed to the renewed optimism of the IMF. For 2017, their forecasts are thus recorded respectively in +2,1 %, +6,8 %, +1,5 %, +3 % and +2,2 %.

These positive developments give reasons to be more confident, but neither policies nor markets have to be satisfied with that.
The chief economist of the IMF, and Maurice Obstfeld

The current acceleration of growth is all the more “remarkable” that for the first time since the beginning of the decade, it relates to a larger number of countries, ” says Mr. Obstfeld.

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The recovery is observed in almost three-quarters of the country.


In the short term, the risks are rather limited to : the recovery could be even further strengthened, supported by consumer confidence and strong companies in the developed countries.


“These positive developments give reasons to be more confident, but neither policies nor markets have to be satisfied with that “, warned Maurice Obstfeld.


As the global recovery might not be sustainable to the extent that it is “not full” with 25 % of the countries cannot always take advantage of the improvement.


In Europe, the forecast of the United Kingdom is, itself, remained unchanged at +1.7% in after having been lowered by 0.3 of a percentage point in July. The IMF points the finger at both the slowdown in consumption and uncertainty in the medium term related to the consequences of Brexit.


Clouds on the horizon


Turning to the emerging countries and the poor countries, exporters of raw materials — especially energy — the institution of Washington notes that they are faced with civil unrest and political that it is in the Middle East, North Africa and sub-saharan or Latin America.


And other risks are on the horizon. The IMF is particularly concerned about the possibility that the chinese authorities fail to control the expansion of credit. The soaring public and private debt has certainly bolstered the growth in china, but it has decreased financial stability.


As in April, the institution of Washington points out that the temptation of protectionism could undermine global growth.

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Furthermore, she mentioned the risk factors for “non-economic” such as geopolitical tensions, political divisions, weak governance, corruption or even extreme weather events, terrorism and security issues.


“These risks are particularly interconnected and can reinforce each other. For example, a movement of withdrawal is associated with increased geopolitical tensions and the risks of non-economic may directly weigh on economic activity, ” notes the IMF.


In this context of persistent risk, policy makers must keep their eyes fixed on the long-term and seize the opportunity for structural reforms and fiscal needed to increase the capacity of resistance in case of shocks to come.


Last week, the director general of the IMF has called on countries to take the path of reform.


“We need to find ways to create new jobs,” said Christine Lagarde in a speech as a prelude to the general assembly of the IMF which is being held this week in the american capital.


She had then cited the successful example of Spain, where employers and employees are able to introduce more flexibility on the labour market, and Mexico, including the evolution of the laws allowed young people to enter more easily the labour market.