The International Monetary Fund has raised its global growth forecast for this year but also warned protectionist policies could undermine a broad-based, but modest, recovery.
It credits improving manufacturing and trade in bigger economies for the 3.5 percent growth it now expects, up from January’s 3.4 percent forecast.
IMF chief economist Maurice Obstfeld said: “This improvement comes primarily from good economic news for Europe and Asia as well as our continuing expectation for higher growth this year in the US.”
Its US growth forecasts for 2017 – of 2.3 percent and 2.5 percent in 2018 – are unchanged and partly due to expectations President Trump will cut taxes and increase government spending.
The IMF has admitted that Britain’s economy has been stronger than it had expected since last year’s vote to leave the European Union and said the challenge now is for the UK is to successfully navigate that exit and trade deals.
Its UK growth forecast was significantly boosted from 1.5 percent to 2.0 percent this year, slowing to 1.5 percent in 2018.
The 19 countries in the eurozone – although overshadowed by Brexit and election uncertainties – are expected to achieve modest growth thanks to the weaker euro and accommodative fiscal policy such as low interest rates.
The IMF thinks there will be 1.7 percent growth this year in the region, unchanged from last year’s performance and easing to 1.6 percent in 2018.
Protection threats to growth in Europe were also highlighted by IMF economists, just days ahead of the first round of the French presidential election.