IMF downgrades UK and US growth forecasts for 2017
The US and UK economies are expected to grow more slowly in 2017 than previously predicted, the International Monetary Fund (IMF) said. The UK would witness 1.7% growth in 2017 compared to the earlier 2% forecast. The US growth forecast has also been reduced to 2.1% from 2.3%. The global growth projections of 3.5% for 2017 remain the same.
IMF says UK experienced weak growth in early 2017
The IMF's chief economist Maurice Obstfeld said the revised UK growth forecast was due to "weaker-than-expected activity" during the first three months of 2017. The IMF in its latest World Economic Outlook hasn't revised its UK growth forecast for 2018 at 1.5%. He said long-term UK growth projections would be positive or negative based on the outcome of Brexit negotiations.
UK Treasury says IMF forecasts proves importance of Brexit negotiations
The UK Treasury said the IMF forecast highlights the government's plans to boost the economy by negotiating "the very best deal with the EU" after Brexit were "vitally important." "Employment is at a record high and the deficit is down by three quarters, showing that the fundamentals of our economy are strong," it added.
Trump's policy uncertainty leads to growth forecast downgrade
The IMF has downgraded its 2018 forecast for US economic growth to 2.1% from 2.5%. It said the main reason behind its downward revision was because of "the assumption that fiscal policy will be less expansionary than previously assumed." The Trump administration was expected to pursue tax cuts and increase infrastructure spending to boost the economy, which seems less likely now.
IMF improves euro area and China growth projections
The IMF has increased the euro area's 2017 growth forecast to 1.9% from 1.7% due to better than expected first-quarter growth which indicates "stronger momentum in domestic demand than previously anticipated." China's growth projections have risen from 6.6% to 6.7%, thanks to "a strong first quarter of 2017 and expectations of continued fiscal support." 2018 growth is expected to be 6.4% instead of 6.1%.
