U.S. expected to make smaller contribution to global growth
WASHINGTON — The International Monetary Fund upgraded the economic outlook for Europe, Japan and China this year. But the fund left its forecast for global growth unchanged from an April forecast, partly because the United States is unlikely to get much help from tax cuts and higher spending.
In a report out Monday, the IMF kept its expectation for worldwide economic growth at 3.5 percent this year. But it now forecasts 1.9 percent growth for the 19 countries that use the euro currency (up from 1.7 percent in April). The fund expects Japan to grow 1.3 percent (up from the previously expected 1.2 percent) and China to expand 6.7 percent (versus 6.6 percent).
The U.S. economy is expected to grow 2.1 percent, down from the 2.3 percent expected in April when hopes were higher for tax cuts. The Trump administration has vowed to restore U.S. growth to 3 percent a year through a combination of deregulation, tax cuts and infrastructure spending. But the tax reductions and spending program have been stalled by political discord.
The IMF releases its World Economic Outlook report in April and September or October and publishes updates in January and July.
The fund found that confidence and stability have returned to the eurozone, which was rocked by a debt crisis in the aftermath of the Great Recession of 2007-2009. Spending, investment and exports are up in Japan. Government stimulus is boosting China’s economy, which had steadily decelerating since 2010, but economists worry that subsidized growth isn’t sustainable.