International Monetary Fund reviews Ukraine's GDP downward growth forecast for 2019

The global economy will slow to 3.7 per cent in the medium term after recording its fastest pace of growth past year since 2011, as a result of the unwinding of U.S. stimulus and a deceleration of advanced economies, the International Monetary Fund said on Tuesday.

"Global growth is expected to tick up to 3.9 per cent this year and next, supported by strong momentum, favourable market sentiment, accommodative financial conditions, and the domestic and worldwide repercussions of expansionary fiscal policy in the United States", the worldwide Monetary Fund said.

This is while Azerbaijani government expects a 6-8 percent inflation rate this year.

The International Monetary Fund on Tuesday lifted South Africa's economic growth forecast for the next two years citing the election of a new political leadership, but warned growth would underperform if no economic reforms were carried out. Forecasts were cut slightly for Canada, the Middle East and North African countries, as well as a number of low-income developing countries.

While President Trump's tax cuts are expected to boost the United States and global growth in the short term, the report warned that those effects will soon wear off as well.

"The prospect of trade restrictions and counter-restrictions threatens to undermine confidence and derail global growth prematurely", said Maurice Obstfeld, the fund's economic counsellor and director of the research department.

"Our strong message at this meeting is there is a multilateral system".

Rather than lower the trade deficit, as Trump has called for, the United States trade actions could expand it by $150 billion by 2019, he said.

Last month, the Trump administration imposed steep tariffs on global steel and aluminum exports to the U.S. and threatened China with about $100 billion in additional tariffs.

According to the report, the recapitalisation plan for major public-sector banks announced in 2017 will help replenish capital buffers and improve the banking sector's ability to support growth.

The global economy is still on an upswing, but the good times may not last beyond the next year or two. "However, advancement of the outstanding reforms is critical for reinvigorating economic growth and making it more inclusive", said the International Monetary Fund.

The positive outlook is consistent with its global forecast, which predicts that the global economy will grow by a fairly rapid 3.9 percent this year and next year.

  • David Armstrong