International Monetary Fund revises upwards projection for Cypriot economy

International Monetary Fund revises upwards projection for Cypriot economy

The International Monetary Fund (IMF) on Tuesday said the global economic recovery is continuing at a faster pace as it upgraded its growth projection to 3.6 percent for this year, citing an upswing in countries like China, Japan, Russia, and some emerging economies in Europe.

"Given the significant policy uncertainty, IMF staff's macroeconomic forecast now uses a baseline assumption of unchanged policies, whereas the April 2017 WEO (World Economic Outlook) built in a fiscal stimulus from anticipated tax cuts", the Fund said in its revisions to its US economic forecasts. Growth is forecast to be 1.7 per cent this year and 1.5 per cent next.

In its South Asia Economic Focus (Fall 2017) released on Monday, the World Bank reduced India's GDP growth forecast to 7% for 2017-18 from 7.2% estimated earlier, blaming disruptions caused by demonetisation and the implementation of the GST, while maintaining at the same time that the economy would claw back to grow at 7.4% by 2019-20.

As other advanced nations outpace the United Kingdom, the IMF's new projections show Britain falling from the second fastest G7 economy in 2016 to the third slowest in 2018.

The short-term pain that has befallen upon Indian economy was made evident by the comment that growth forecast is cut due to lingering effects of disruption caused by demonetisation and transition costs of GST, even as International Monetary Fund said that GST and other reforms could push India's growth to above 8% in the medium term. Even more pessimistically, the Centre for Economics and Business Research anticipates that the United Kingdom economy will grow by just 1.3 per cent in 2017, representing a substantial downward revision from an earlier forecast of 1.7 per cent.

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"A closer look suggests that the global recovery may not be sustainable" and neither policy makers nor markets should be "lulled into complacency", warned Maurice Obstfeld, the IMF's chief economist, in a note accompanying the forecast.

The World Bank's growth projection made in June was 7.2% for this year and 7.5% next year.

The country's 2017 forecast (6.8 percent, against 6.6 percent in April) reflects stronger growth outturns in the first half of 2017 as well as more buoyant external demand.

The IMF also lowered the India's growth for 2018 to 7.4%, 0.3 percentage points less than its previous two projections in July and April. GST was put in place on July 1.

"The welcome cyclical 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". For next year it was projected at 3.7 percent.

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