IMF downgrades US and UK growth
The UK and US economies will expand
more slowly in 2017 than previously predicted, according to the
International Monetary Fund (IMF).
It said "weaker-than-expected
activity" in the first three months of the year meant the UK would grow
by 1.7%, compared with an earlier 2% forecast.
And the IMF revised down its US outlook from 2.3% to 2.1%.
However, its overall global economic predictions - of 3.5% growth in 2017 and 3.6% in 2018 - remain unchanged.
Meanwhile
the outlook for several eurozone economies is brighter than initially
thought, with countries including France, Germany, Italy and Spain
seeing growth forecasts revised up.
In its latest World Economic
Outlook, the IMF said the "pick-up in global growth" that it had
anticipated in its previous survey in April remained "on track".
But
it added that while the global growth projection was unchanged that
masked "somewhat different contributions at the country level".
'Fundamentals strong'
The
UK growth forecast for 2018 remains unchanged at 1.5%, but US growth
for next year is now predicted to come in at 2.1%, instead of the 2.5%
previously forecast.
"While the markdown in the [US] 2017 forecast
reflects in part the weak growth outturn in the first quarter of the
year, the major factor behind the growth revision, especially for 2018,
is the assumption that fiscal policy will be less expansionary than
previously assumed, given the uncertainty about the timing and nature of
US fiscal policy changes," the IMF said.
"Market expectations of fiscal stimulus have also receded."
A
UK Treasury spokesperson said the IMF forecast underlined why the
government's plans to increase productivity and get "the very best deal
with the EU" after Brexit were "vitally important".
"Employment is
at a record high and the deficit is down by three quarters, showing
that the fundamentals of our economy are strong," they added.
Economists warn that IMF forecasts are not always right.
"The
IMF, a multi-lateral institution, takes a step back and looks at a
broad range of activities across the world, but they do sometimes get
things wrong and we wouldn't want to put too much emphasis on what's
been released today," said Lucy O'Carroll, chief economist of Aberdeen
Asset Management.
President Donald Trump's administration had been widely expected to
pursue policies including tax cuts and infrastructure investment, which
would have given a boost to the US economy.
However, that outcome now appears less likely.
Eurozone 'momentum'
The biggest
eurozone revisions were for the Spanish and Italian economies. Spain is
now forecast to grow 3.1% this year, up from the previous prediction of
2.6%. Italy's 2017 growth forecast has risen from 0.8% to 1.3%.
The euro area as a whole is expected to grow by 1.9% this year, up from 1.7%.
The
IMF said first-quarter growth in many of those countries better than
expected, and that there was evidence of "stronger momentum in domestic
demand than previously anticipated".
China's growth projections
have also been revised up, reflecting, the Fund says, "a strong first
quarter of 2017 and expectations of continued fiscal support".
Its 2017 forecast has risen from 6.6% to 6.7%, while growth in 2018 is now expected to be 6.4% instead of 6.2%.
The
IMF hailed China's "policy easing and supply-side reforms", including
efforts to reduce excess capacity in the industrial sector.
BBC
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