2017.01.1703:02:00UTC+00IMF Raises U.S. Growth Outlook

The International Monetary Fund raised its U.S. growth outlook citing likely shift in policy mix under the leadership of President-elect Donald Trump, while global growth projections were kept unchanged.

Global growth will rise to a rate of 3.4 percent in 2017 and 3.6 percent in 2018, from a 2016 rate of 3.1 percent, the IMF said in its World Economic Outlook, released Monday. The global growth projections were left unrevised from the October forecasts.

Risks to the global growth outlook are two sided but are assessed to be skewed to the downside, the lender noted.

The U.S. economy is forecast to grow 2.3 percent this year and 2.5 percent next year. The lender had previously projected 2.2 percent growth for 2017 and 2.1 percent for 2018.

At this early stage, the specifics of future fiscal legislation remain unclear, as do the degree of net increase in government spending and the resulting impacts on aggregate demand, potential output, the Federal deficit, and the dollar, the Washington-based lender said.

Output remains below potential in a number of other advanced economies, notably in the euro area, the IMF observed. Eurozone growth was forecast to be 1.6 percent each this year and next.

The U.K. growth projections for 2017 were revised upward for the U.K., mostly on account of a stronger-than-expected performance in the latter part of 2016.

The 2017 growth forecast was revised up for China to 6.5 percent, which was 0.3 percentage point above the October forecast on expectations of continued policy support. For 2018, growth was forecast to be 6 percent.

In India, the growth forecast for the current 2016-17 and next fiscal year were trimmed by one percentage point and 0.4 percentage points, respectively, primarily due to demonetization. The lender forecast 6.6 percent growth for 2016-17 and 7.2 percent for next fiscal.