World economy will grow faster in 2017

Dubai's economy was estimated to grow at 3.3 per cent in 2016 and 3.6 per cent in 2017, says the IMF.

Global economic activity is projected to pick up pace in 2017 and 2018 after a lackluster performance in 2016, the International Monetary Fund (IMF) said.

Global growth for 2016 is now estimated at 3.1 per cent, in line with the October 2016 forecast by the Washington-based fund.

As per its latest global economic outlook, economic activity in both advanced economies and emerging economies is forecast to accelerate in 2017-18, with global growth projected to be 3.4 per cent and 3.6 per cent respectively, again unchanged from the October forecasts.

In the Middle East, growth in Saudi Arabia is expected to be at 0.4 per cent in 2017, weaker than previously forecast, as oil production is cut back in line with the recent Opec agreement, while civil strife continues to take a heavy toll on a number of other countries.

For the GCC, the IMF maintained its previous growth estimates of 1.75 per cent in 2016 and three per cent in 2017.

In October 2016, the IMF said the UAE is expected to achieve 2.5 per cent gross domestic product (GDP) growth in 2017 compared to 2.3 per cent in 2016. Dubai's economy was estimated to grow at 3.3 per cent in 2016 and 3.6 per cent in 2017 compared to 3.5 per cent in 2015.

In India, the growth forecast for the current (2016-17) and next fiscal year were trimmed by one percentage point and 0.4 percentage point respectively, primarily due to the temporary negative consumption shock induced by cash shortages and payment disruptions associated with the recent currency note withdrawal and exchange initiative.

The IMF said the outlook for advanced economies has improved for 2017-18, reflecting somewhat stronger activity in the second half of 2016 as well as a projected fiscal stimulus in the United States.

Near-term growth prospects were revised up for China, due to an expected policy stimulus, but were revised down for a number of other large economies - most notably India, Brazil and Mexico.

"The assumptions underpinning the forecast should be more specific by the time of the April 2017 World Economic Outlook, as more clarity emerges on US policies and their implications for the global economy," said Maurice Obstfeld, economic counsellor and IMF research department director.

"Our central projection is that global growth will rise to a rate of 3.4 per cent in 2017 and 3.6 per cent in 2018, from a 2016 rate of 3.1 per cent. Much of the better growth performance we expect this year and next stems from improvements in some large emerging market and low-income economies that in 2016 were exceptionally stressed. That being said, compared to our view in October, we now think that more of the lift will come from better prospects in the United States, China, Europe and Japan," said Obstfeld.

The IMF said that among emerging economies, China remains a major driver of world economic developments.

"Our China growth upgrade for 2017 is a key factor underpinning the coming year's expected faster global recovery. This change reflects an expectation of continuing policy support; but a sharp or disruptive slowdown in the future remains a risk, given continuing rapid credit expansion, impaired corporate debts and persistent government support for inefficient state-owned firms."

At the global level, other vulnerabilities include higher popular antipathy towards trade, immigration and multilateral engagement in the United States and Europe; widespread high levels of public and private debt; ongoing climate change - which especially affects low-income countries; and, in a number of advanced countries, continuing slow growth and deflationary pressures, said Obstfeld.

In Europe, Britain's terms of exit from the European Union remain unsettled and the upcoming national electoral calendar is crowded, with possibilities of adverse economic repercussions in the short and longer terms, he said.

- issacjohn@khaleejtimes.com

Issac John

issacjohn@khaleejtimes.com