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18th-Jan-2017

IMF boosts US growth estimate on expected stimulus

By AFP, Washington


The International Monetary Fund on Monday boosted its estimates for US growth on expected stimulus spending by the incoming Trump administration, but kept the forecast for global growth unchanged.
The IMF's quarterly World Economic Outlook (WEO) however said the forecasts for 2017 and 2018 are beset by uncertainty and risk, including signs of rising protectionism.
It sees world growth of 3.4 percent this year and 3.6 percent in 2018, unchanged from the October report, as concerns about slowing in major developing economies were offset by the recovery in advanced economies and China.
The US growth estimate was raised a tenth of a point this year to 2.3 percent, and for next year by four-tenths to 2.5 percent.
The IMF said it used the most likely of many possible scenarios for the United States under President-elect Donald Trump, one that includes higher spending and other steps to boost the economy.
This is in contrast to the World Bank report released last week, which did not change the US forecasts because it said Trump's policy plans were too uncertain.
Both organizations agree the forecasts are clouded by unknowns.
There is "a wide dispersion of possible outcomes around the projections, given uncertainty surrounding the policy stance of the incoming US administration and its global ramifications," the IMF said.
However, the forecasts should become more certain by the release of the next World Economic Outlook in April "as more clarity emerges on US policies and their implications," it said.
Among the uncertainties, the IMF noted that increased spending to stimulate the economy, as Trump has proposed, means "stronger future demand implying more inflationary pressure," which in turn means the US central bank may have to raise interest rates faster than currently expected.