IMF Says Trump Tax Cuts to Provide Short Lived Growth Boost

The global economy will grow faster than expected this year and next as Donald Trump’s corporate tax cuts provide a short-term shot in the arm, despite fears over rising inequality and overheating financial markets, the International Monetary Fund has said.

Launching its latest World Economic Outlook (WEO) report at the annual Davos gathering of the global elite in Switzerland this week, the IMF upgraded its growth forecast for the world economy by 0.2 percentage points to 3.9% for both 2018 and 2019.



Maurice Obstfeld, the IMF’s economic counsellor, said Trump’s tax cuts, passed into law at the end of last year, should encourage businesses to invest in additional economic output – which should provide a positive, albeit short-lived, boost for the US and its trade partners. However, he said there are risks on the horizon from a potential sharp drop in markets after the recent surge in equity valuations.

He also warned world leaders gathering at the Swiss ski resort that they would need to tackle inequality and boost the resilience of their economies, or face a downturn that will “come sooner and be harder to fight” than expected.

via The Guardian

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza