“Momentum in the global economy has been building since the middle of last year, allowing us to reaffirm our earlier forecasts of higher global growth this year and next,” said Economic Counsellor and Director, Maurice Obstfeld of the International Monetary Fund (IMF)’ Research Department.
However, Obstfeld said that despite these signs of strength, many countries will continue to “struggle” this year, reported the India Today.
“We project the world economy to grow at a pace of 3.5 per cent in 2017, up from 3.1 per cent last year, and 3.6 per cent in 2018,” Obstfeld said.
“Acceleration will be broad-based across advanced, emerging, and low income economies, building on gains we have seen in both manufacturing and trade,” he said.
“The IMFs new projection for 2017 is marginally higher than what they expected in its last update. This improvement comes primarily from good economic news for Europe and Asia, and within Asia, notably for China and Japan,” he added.
“Despite these signs of strength, many other countries will continue to struggle this year with growth rates significantly below past readings. Commodity prices have firmed since early 2016, but at low levels, and many commodity exporters remain challenged — notably in the Middle East, Africa, and Latin America,” added Obstfeld.
“At the same time, a combination of adverse weather conditions and civil unrest threaten several low-income countries with mass starvation. In Sub-Saharan Africa, income growth could fall slightly short of population growth, but not by nearly as much as last year,” he said.
“So, the world economy may be gaining momentum, but we cannot be sure that we are out of the woods. How can countries safeguard and nurture the global recovery?” he said.
“We could be at a turning point. But even as things look up, the post? World War II system of international economic relations is under severe strain despite the aggregate benefits it has delivered — and precisely because growth and the resulting economic adjustments have too often entailed unequal rewards and costs within countries,” he said.
“Policy must address these disparities head-on to ensure the stability of an open, collaborative trading system that benefits all,” he added.
According to the report, credible strategies were needed in many countries to place public debt on a sustainable path.
“Adjusting to lower commodity revenues and addressing financial vulnerabilities remain key challenges for many emerging market and developing economies. The world also needs a renewed multilateral effort to tackle a number of common challenges in an integrated global economy,” the report said