Economy Watch: IMF Puts US Growth Prospects Up in 2017

In its first 2017 economic outlook report, the IMF revised its forecast for U.S. growth up by 0.1 percentage points for this year and 0.4 points for 2018.
Source: International Monetary Fund

Source: International Monetary Fund

The International Monetary Fund revised its forecast for U.S. growth up by 0.1 percentage points for this year and 0.4 points for 2018, according to its first 2017 World Economic Outlook report, which was released on Monday. According to the organization, the U.S. economy will expand by 2.3 percent in 2017, before turning in 2.5 percent growth in 2018, according to the update.

The report stressed a certain amount of unpredictability in what happens next in the United States, however. “This forecast is based on the assumption of a changing policy mix under a new administration in the United States…Staff now project some near-term fiscal stimulus and a less gradual normalization of monetary policy. This projection is consistent with the steepening U.S. yield curve, the rise in equity prices, and the sizable appreciation of the U.S. dollar since the Nov. 8 election.

The IMF’s outlook for all advanced economies has improved for 2017-18, reflecting somewhat stronger activity in the second half of 2016, as well as a projected fiscal stimulus in the United States. By contrast, growth prospects have marginally worsened for some emerging market and developing economies, where financial conditions have generally tightened.

For instance, near-term growth prospects were revised up for China, due to expected policy stimulus, but were revised down for a number of other large economies—most notably India, Brazil and Mexico. Notable negative risks to economic activity, especially in export-driven national economies, include a possible shift toward inward-looking policy platforms and protectionism, the IMF posited.