International Monetary Fund upgrades growth forecast for Malaysia

25 July, 2017, 11:41 | Author: Celia Hoffman
  • Donald Trump's attempts to push a healthcare bill through the Republican-controlled Senate collapsed last week

The International Monetary Fund (IMF) in an update to its April forecasts lowered its 2017 growth forecast by 0.3 percentage points to 1.7 percent following weaker than anticipated first quarter figures, in which the British economy grew only 0.2 percent.

The IMF released its latest world economic outlook update, showing a positive outlook for Canada and a shakier economic forecast for the United States.

The organization also revised up its expectations for the many euro area countries, including France, Germany, Italy and Spain, where growth for the first quarter was generally above expectations.

The IMF also listed the US economy's sluggish start to 2017 - with a first-quarter growth of just 1.4% as another factor in its slashing of current forecasts.

Meanwhile, the International Monetary Fund had revised upwards its 2017 growth projection for Japan to 1.3%, from its April estimate of 1.2%, and had revised China's 2017 growth to 6.7% from 6.6% in April.

The organization estimates that Latin America and the Caribbean will grow 1 percent in 2017 and 1.9 percent in 2018, which - in both cases - is 0.1 percent lower than its April forecast.

The outlook also said the world is relying less than expected on the USA and the United Kingdom, and more on China, Japan, Europe and Canada. For Asean-5 countries namely Indonesia, Malaysia, the Philippines, Thailand and Vietnam, the growth projection was up 0.1 point to 5.1% for 2017 and unchanged at 5.2% for 2018.

Asserting the need to build up financial sector resilience and rein in leverage and lower financial risks, he warned that tightening financial conditions globally might trigger spillovers to emerging markets.

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Overall global economic growth predictions stayed unchanged, at 3.5 percent in 2017 and 3.6 percent in 2018.

"The slight upward revision to 2017 growth relative to the April 2017 WEO forecast reflects a modest upgrading of growth prospects for South Africa, which is experiencing a bumper crop due to better rainfall and an increase in mining output prompted by a moderate rebound in commodity prices".

The report seems to suggest good times ahead for the global economy, with risks to growth in the medium term remaining low.

Ringgit up 0.05% to 4.2818 versus the USA dollar at 3.47pm.

Nigeria's economy dropped into recession in 2016, with the economy contracting by 1.6 percent.

President Donald Trump's promises of a fiscal boost have yet to materialise and they had been accounted for in the IMF's growth models.

Monetary policy normalization in some advanced economies, notably the U.S., could trigger a faster-than-anticipated tightening in global financial conditions.

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