The world economy seems to be gaining momentum, according the chief economist of the International Monetary Fund.
Writing in the IMF’s new World Economic Outlook, Maurice Obstfeldt said “we could be at a turning point”.
The report forecasts global growth this year of 3.5%, up from 3.1% predicted in 2016. UK growth, at 2%, is stronger than any of the major developed economies apart from the US.
But the IMF warns of headwinds that could weaken its global projections.
The organisation highlights the possibility of protectionism and what the report calls “trade warfare”.
The dominant tone of the report is rather sunnier than it has been for some time. For much of the period since the financial crisis of 2008 the IMF has worried that the recovery was failing to generate momentum.
This time the IMF sees buoyant financial markets and “a long awaited cyclical recovery in manufacturing and trade”.
The rebound in the prices of commodities has also helped dispel fears of deflation or falling prices which has been seen as a danger especially in the developed world. Deflation can, in some circumstances aggravate economic weakness.
The forecast for this year would be a marked improvement on last year’s 3.1%.
It’s striking that in the forecast for the larger economies, there are none predicted to suffer a decline in economic activity this year or next.
Even Brazil and Russia, two countries that have suffered from the fallout of international and domestic political difficulties, are forecast to see growth this year, although it’s not particularly strong.