WASHINGTON – The International Monetary Fund said Monday that Japan’s economy is expected to grow 0.8 percent this year, up 0.2 percentage point from its estimate in October, mostly on account of a stronger-than-expected performance during the latter part of last year.
The IMF also raised upward its forecast for U.S. economic growth by 0.1 point to 2.3 percent in 2017 and 0.4 point to 2.5 percent in 2018 due to fiscal stimulus expected to be launched by the incoming administration of Donald Trump.
Trump, a Republican businessman who will take office Friday, has vowed to stimulate the U.S. economy with tax cuts, deregulation and increased spending on infrastructure.
China’s 2017 growth rate was revised up by 0.3 point to 6.5 percent on the back of continued fiscal stimulus, the Washington-based institution said in an update of its World Economic Outlook.
However, lower growth rates of some emerging economies such as Brazil, India and Mexico will offset higher forecasts for the world’s three largest economies — the United States, China and Japan — leaving the projection for global growth this year unchanged at 3.4 percent.
The updated report said global growth will accelerate to 3.6 percent in 2018 from an estimated 3.1 percent in 2016, but referred to “uncertainty surrounding the policy stance of the incoming U.S. administration and its global ramifications.”
Referring to Trump’s anti-globalism rhetoric during the presidential campaign, the report said: “Recent political developments highlight a fraying consensus about the benefits of cross-border economic integration.
“Increased restrictions on global trade and migration would hurt productivity and incomes, and take an immediate toll on market sentiment.”
IMF chief economist Maurice Obstfeld cited uncertainty about Trump’s planned stimulus program, saying, “The specifics of future fiscal legislation remain unclear, as do the degree of net increase in government spending and the resulting impacts on aggregate demand, potential output, the federal deficit and the dollar.”
According to the IMF report, the Japanese economy is likely to grow 0.5 percent in 2018, unchanged from the October estimate but a further slowdown from the 0.9 percent expansion estimated for 2016.
China’s 2018 growth rate was also left unchanged at 6.0 percent, but it would mark a deceleration from the estimated 6.7 percent in 2016.
Referring to the Chinese economy, the report said that “continued reliance on policy stimulus measures, with rapid expansion of credit and slow progress in addressing corporate debt, especially in hardening the budget constraints of state-owned enterprises, raises the risk of a sharper slowdown or a disruptive adjustment.”
The IMF is projecting that the eurozone economy will grow 1.6 percent in both 2017 and 2018, down slightly from an estimated 1.7 percent in 2016.
The growth rate of Britain, which has voted to leave the European Union, is expected to slow to 1.5 percent this year and 1.4 percent next year from an estimated 2.0 percent in 2016.