REPEAT: IMF WEO: Global Econ Growth Seen Faster; Risks Remain

Repeats Story Initially Transmitted at 13:00 GMT Oct 10/09:00 EST Oct 10

--Global Growth Now Seen +3.6% 2017, +3.7% 2018

--Advance Economies Growth +2.2% 2017, +2.0% 2018

--US Growth Revised Down Vs April; +2.2% 2017, +2.3% 2018

--WEO Sees Little US Fiscal Policy Change In 2017, Tighter 2018 

By Kevin Kastner

     WASHINGTON (MNI) - Global economic growth is expected to be stronger than

previous reported in the April and July versions of the International Monetary

Fund's World Economic Outlook, the most recent update Tuesday showed.

     Global economic growth is now expected to hit 3.6% in 2017 and 3.7% in

2018, both a tenth of a point higher than reported in April and July, with

stronger growth seen for advance economies and emerging economies alike. 

     However, the IMF cautioned that the pace of growth remains weak in a number

of countries and that inflation, particularly commodities prices, remains below

target. It suggested that while near-term growth appears stronger, medium-term

risks "are still tilted toward the downside." 

     Particularly, the IMF noted that faster-than-expected monetary policy

tightening combined with stubborn gains in inflation would be risks to global

growth. So would be protectionist policies that reduce trade and noneconomic

factors such as geopolitical tensions.

     While advanced economies are expected to see stronger growth than

previously estimated, GDP rising 2.2% in 2017 and 2.0% in 2018, there were

downward adjustment to the growth pace in the U.S. and UK.

     For the U.S. specifically, growth is now seen at 2.2% in 2017 and 2.3% in

2018, both up modestly from the rates seen in the July WEO update, but revised

lower from the April WEO reports, when 2017 growth was expected at 2.3% in 2017

and 2.5% in 2018.

     One key reason for the downward adjustment was a change in the belief that

a tax cut will be assured under the Trump administration.

     For 2017, the WEO said "given the significant policy uncertainty, the

forecast now uses a baseline assumption of unchanged policies, whereas in April

it assumed a fiscal stimulus driven by then-anticipated tax cuts."

     The WEO noted that the 2018 outlook for U.S. fiscal policy is about the

same as in the October 2016 WEO, prior to the election of Donald Trump, but is

significantly tighter than the April 2017 WEO estimate. 

     On monetary policy, the WEO sees the path of normalization to be more

gradual than in the April estimate, and thus more accommodative than it would

have been otherwise. The interest rate is expected be "broadly unchanged at

100-125 basis points for the rest of 2017." That forecast would not necessarily

rule out another rate hike in late-December.

     For 2018, the WEO expects a total 75 basis point rise, matching the three

rate hikes many analysts expect from the FOMC next year. The WEO expects a

monetary policy to reach "a long-term equilibrium rate of slightly less than 3

percent in 2020."

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