Predicted growth in the global economy for both this year and next has been upgraded in the latest forecast from the International Monetary Fund (IMF).

Financial markets stabalised after turbulence in 2015 says IMF

In its latest World Economic Outlook, the Washington-based organisation, which began its round of annual meetings on Tuesday, increased the prospect of global growth to 3.6 per cent this year and 3.7 per cent in 2018 – an upgrade of 0.1 per cent for both years since the summer report.“Only a year-and-a-half ago, the world economy faced stalling growth and financial market turbulence. The picture now is very different,” the IMF said.“Financial conditions remain buoyant across the world, and financial markets seem to be expecting little turbulence going forward, even as the Federal Reserve continues its monetary normalisation process and the European Central Bank inches up to its own.”But the IMF warned that while the turnaround provided “good cause” for future confidence, “neither policymakers nor markets should be lulled into complacency” and that, to ensure the recovery would be stable, politicians needed to act to introduce long-term fiscal and structural reforms.“The possibility that they don’t – governments far too often wait for crises to push them into decisive action - is itself a source of risks to the outlook, as well as a barrier to more inclusive and sustainable growth,” the report said. “Recent economic progress provides a global environment of opportunity, and policymakers should not let their chance go to waste.”The IMF slightly increased its predictions for most major economies. The US, whose growth projections were cut in the summer, saw an upgrade to 2.2 per cent in 2017 and to 2.3 per cent next year.“In the United States, weakness in consumption in the first quarter turned out to be temporary, while business investment continued to strengthen, partly reflecting a recovery in the energy sector,” the IMF said.

Growth forecast did not rise for the UK

The UK was the only major economy that did not see a rise in its growth forecast, with the IMF sticking to its previous forecast of 1.7 per cent this year and only 1.5 per cent in 2018. The report blamed rising inflation and a fall in household spending as a result of sterling’s fall since the Brexit vote for the slowdown.“The medium-term growth outlook is highly uncertain and will depend in part on the new economic relationship with the EU and the extent of the increase in barriers to trade, migration, and cross-border financial activity,” the IMF said.“Growth in most of the other advanced economies, with the notable exception of the United Kingdom, picked up in the first half of 2017 from its pace in the second half of 2016, with both domestic and external demand contributing.”Despite the projected drop in growth since last year, the UK’s rate is still expected to be marginally higher in 2017 than France’s, Japan’s and Italy’s.

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However, the IMF report was published on Tuesday as official figures showed Britain’s trade-in-goods deficit with the rest of the world hit a record high of £14.25 billion in August, up from £12.8 billion in July.Imports jumped by 4.2 per cent during the month, mainly due to higher imports of chemicals, machinery and textiles, while exports rose by only 0.7 per cent.The UK imported an all-time high of £22 billions-worth of physical items from the EU during the month, while exports to Europe amounted to £14 billion. Imports from non-EU countries amounted to £19 billion - also a record - while exports stood at £13.8 billions-worth of goods.For related news and features, visit our Enterprise section.Relocate’s new Global Mobility Toolkit provides free information, practical advice and support for HR, global mobility managers and global teams operating overseas.Access hundreds of global services and suppliers in our Online Directory  

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