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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