Global growth projections for this year and the next, including those for emerging and developing Asia, have been upgraded in the October 2017 edition of the World Economic Outlook (WEO) of the International Monetary Fund (IMF), based on the strengthening of the upswing in global economic activity.
The latest WEO now projects global growth at 3.6% for this year and 3.7% for next—in both cases 0.1 percentage point above its previous forecasts, and well above 2016’s global growth rate of 3.2%, which was the lowest since the global financial crisis.
“The global recovery is continuing, and at a faster pace. The picture is very different from early last year, when the world economy faced faltering growth and financial market turbulence. We see an accelerating cyclical upswing boosting Europe, China, Japan, and the United States, as well as emerging Asia,” said Maurice Obstfeld, IMF chief economist.
For 2017, most of the report’s upgrade owes to brighter prospects for the advanced economies, whereas for 2018’s positive revision, emerging market and developing economies play a relatively bigger role. Notably, sub-Saharan Africa, where growth in per capita incomes has on average stalled for the past two years, is expected to improve overall in 2018.
“The current global acceleration is also notable because it is broad-based—more so than at any time since the start of this decade. This breadth offers a global environment of opportunity for ambitious policies that will support growth and raise economic resilience in the future. Policymakers should seize the moment: the recovery is still incomplete in important respects, and the window for action the current cyclical upswing offers will not be open forever,” said Obstfeld.
The upturn after disappointing growth over the past few years provides an ideal window of opportunity to undertake critical reforms, thereby staving off downside risks and raising potential output and standards of living more broadly, he added.
In emerging and developing Asia, growth for 2017 is pegged at 6.5%, up by 0.1 percentage point relative to the April 2017 WEO. The region is expected to expand by 6.5% in 2018 as well.
In China, growth is projected to notch up to 6.8% in 2017, and to slow to 6.5% in 2018. The upward revision to the 2017 forecast—0.2 percentage point relative to the April 2017 WEO—reflects the stronger-than-expected outturn in the first half of the year underpinned by previous policy easing and supply-side reforms. For 2018, the upward revision of 0.3 percentage point mainly reflects an expectation that the authorities will maintain a sufficiently expansionary policy mix to meet their target of doubling real GDP between 2010 and 2020.
In the rest of emerging and developing Asia, growth is expected to be vigorous and marginally higher than in the April 2017 WEO. Strong government spending and data revisions in India led to an upward revision of 2016 growth to 7.1% (6.8% in April), with upward revisions of about 0.2 percentage point, on average, for 2014 and 2015. However, the growth projection for 2017 has been revised down to 6.7% (7.2% in April), reflecting still lingering disruptions associated with the currency exchange initiative introduced in November 2016 and the launch of the national Goods and Services Tax in July 2017.
In the ASEAN-5 economies (Indonesia, Malaysia, Philippines, Thailand, Vietnam), growth is expected to strengthen in 2017 to 5.2% (from 5% in April), partly because of stronger-than-expected external demand from China and Europe. Specifically, economic activity in 2017 is projected to expand by 5.2% in Indonesia, 5.4% in Malaysia, 6.6% in the Philippines, 3.7% in Thailand, and 6.3% in Vietnam.
Photo: Pavlina Rupova
