IMF Issues an Increased 2018 Global Growth Forecast, Influenced by US Tax Cuts

IMF Issues an Increased 2018 Global Growth Forecast, Influenced by US Tax Cuts

The International Monetary Fund issued a revised global growth forecast of 3.9 percent, in a fast paced economical context. However, even if global growth is expected to accelerate significantly, IMF warns that this situation might not last very long and that recession could be closer than we can imagine, despite the encouraging environment for business investments.

At the World Economic Forum meeting that is taking place in Davos, Switzerland, Christine Lagarde, IMF Managing Director claimed that this accelerated economic recovery should give all the leaders in the world a chance to fix their most pressing issues. The raise of the global growth forecast is due, partly, to the cuts in US taxes, which will propel the growth of the US economy to 2.7 percent, with 0.4 more than it was expected by the IMF, making it the biggest growth out of all advanced economies.

However, on the long run, IMF predicted that Trump’s tax plan will not benefit the US, but that, on the contrary, the economic growth is expected to be reduced after 2022, reversing the progress that will be made during the next two years. Furthermore, the growth potential of the first two economies in the world, US and China, is reaching a limit that will inevitably lead to a deceleration of their expansion, this situation being only a matter of time.

The World Economic Forum that is taking place in Davos, Switzerland will tackle the risks associated with the global economy, approaching subjects such as geopolitical tensions and extreme meteorological phenomena. Even if the business environment is in a very good position at the moment, due to the most dynamic economic growth in the past seven years, the IMF aims at encouraging all global economies to take advantage of these favorable moments in order to come up with proactive measures for preventing any future financial shocks.

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