MNI: 5 Things We Learned From The IMF WEO Update

By Kevin Kastner

     WASHINGTON (MNI) - The following are the key points from the quarterly

World Economic Outlook update released by the International Monetary Fund

Monday:

- Global economic growth is now expected to be stronger than in the October WEO

update, with 2018 and 2019 growth rates seen at 3.9% for both years. Previously,

growth was expected to be 3.7% each year. About half of the upward revisions can

be attributed to the US tax plan and its impact on trading partners, the IMF

noted. 

- An improved outlook for US economic growth for both 2018 (2.7% vs prev 2.3%)

and 2019 (2.5% vs 1.9%) is due to the expected positive contribution from the

corporate tax reduction plan passed in December, a factor the Federal Reserve

noted at the January meeting. The IMF sees the tax plan as a boost to economic

growth until 2020, but could a negative starting in 2022 as the temporary impact

fades. 

- There were also upward revisions to growth expectations in the Euro Area,

Japan, and China, but growth the U.K. was unrevised at 1.5% for 2018 and revised

down by 0.1pp to 1.5% for 2019, likely due to the uncertainty surrounding

Brexit.

- The IMF called for a "cautious and data-dependent monetary policy

normalization path" for the advanced economies, but said places such as the US

with low and declining unemployment could require a faster pace of normalization

to confront a pickup in inflation. 

- The IMF noted high asset valuations could lead to a financial market

correction in the medium term, a downside risk to the generally improved outlook

for global growth over the next few years. Upside and downside risks remain

balanced in the near term.

--MNI Washington Bureau; tel: +1 202-371-2121; email: kevin.kastner@marketnews.com

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