Cape Town - Solid growth in advanced economies is expected to propel the world’s economy to register strong growth in both 2018 and 2019, the latest IMF World Economic Outlook report has shown.
According to the report, which was released in Davos on Monday, world growth is expected to exceed 2% in 2018 and 2019.
“The stronger momentum experienced in 2017 is expected to carry into 2018 and 2019, with global growth revised up to 3.9% for both years,” reads the report.
Global growth for 2017 is now estimated at 3.7%, 0.1 percentage point higher than previously projected.
“This forecast reflects the expectation that favourable global financial conditions and strong sentiment will help maintain the recent acceleration in demand, especially in investment, with a noticeable impact on growth in economies with large exports,” reads the report.
“In addition, the US tax reform and associated fiscal stimulus are expected to temporarily raise US growth, with favourable demand spillovers for US trading partners - especially Canada and Mexico - during this period.
“The expected global macroeconomic effects account for around one-half of the cumulative upward revision to the global growth forecast for 2018 and 2019, with a range of uncertainty around this baseline projection.”
Sub-Saharan Africa is also expected to record growth with 2018 expected to record a 3.3% growth up from 2.7% in 2017.
Further growth of 3.5% is anticipated in 2019 on the back of a modest upgrade to the growth forecast for Nigeria while not much growth is expected from South Africa.
The IMF expects, “more subdued growth prospects in South Africa, where growth is now expected to remain below 1% in 2018–19, as increased political uncertainty weighs on confidence and investment.”
The IMF said the current cyclical upswing provides an ideal opportunity for reforms.
“Shared priorities across all economies include implementing structural reforms to boost potential output and making growth more inclusive.
“The improved growth momentum means that fiscal policy should increasingly be designed with an eye on medium-term goals - ensuring fiscal sustainability and bolstering potential output. Multilateral cooperation remains vital for securing the global recovery.”
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