The IMF, citing the consequences of a strong US dollar, is downgrading its outlook for the US economy, but raising its forecast for Europe and Japan.
The IMF on Tuesday predicted that the US economy would grow by 3.1 percent this year and next — a performance the fund characterized as “robust.”
However, the US outlook was down from the IMF’s January forecast of 3.6 percent growth this year and 3.3 percent growth next year. The US economy advanced 2.4 percent last year.
The IMF forecast that the 19 European nations that use the euro currency collectively would expand by 1.5 percent this year and 1.6 percent next year, up from a January forecast of 1.2 percent growth this year and 1.4 percent next. The eurozone grew just 0.9 percent last year.
The fund expects Japan to grow by 1 percent this year and 1.2 percent next year, versus an earlier forecast of 0.6 percent this year and 0.8 percent in 2016. The Japanese economy shrank 0.1 percent last year.
The IMF expects the world economy to grow by 3.5 percent this year, barely up from 3.4 percent last year and unchanged for its January forecast. It raised the outlook for global economic growth for next year to 3.8 percent, up from a January forecast of 3.7 percent.
The international lending agency also left unchanged its prediction that the Chinese economy will grow by 6.8 percent this year and 6.3 percent next year. That marks a sharp deceleration from last year’s 7.4 percent expansion, already the slowest for China in two decades.
IMF deputy director for research Gian Maria Milesi-Ferretti said the slowdown in China reflects the nation’s transition from growth built on often-wasteful investment in factories and real estate to slower, but steadier growth built on spending by Chinese consumers.
“We think it is a good slowdown for China,” he said.
Most of the world’s economies are benefiting from sharply lower oil prices. The price of a barrel of oil has plunged to less than US$52 a barrel, half what it was a year ago.
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