British chancellor welcomes International Monetary Fund upgrade of economic growth for 2017

The IMF's estimate for worldwide economic growth is 3.5 per cent for this year and 3.6 per cent for 2018, up from 3.1 per cent last year.

The IMF said a faster-than-expected pace of interest rate hikes in the U.S. could tighten financial conditions elsewhere, with potential further United States dollar appreciation straining emerging market economies with exchange rate pegs to the dollar or with material balance sheet mismatches.

Beijing said Monday that its economy grew at a 6.9 per cent annual pace from January to March, the fastest in more than a year.

The IMF predicts Australia's economy will grow by 3.1 per cent in 2017 and 3 per cent in 2018.

China's debt-to-GDP ratio rose to 277 percent at the end of 2016 from 254 percent the previous year, with an increasing share of new credit being used to pay debt servicing costs, according to an estimate from UBS.

In its latest World Economic Outlook, it said chronically weak advanced economies are expected to benefit from a cyclical recovery in global manufacturing and trade that started to gain momentum last summer.

"Risks remain skewed to the downside, however, especially over the medium term, with pervasive uncertainty surrounding policies", said the report.

World growth is expected to rise from 3.1 percent in 2016 to 3.5 percent in 2017 and 3.6 percent in 2018. The UAE's forecast is cut to 1.5 per cent from 2.5 per cent a year ago.

The IMF said it is possible short-term growth "could indeed surprise on the upside", if confidence and market sentiment driven by a recovery in commodity prices, buoyant financial markets and deregulation in the US.

The IMF said a resilient China, rising commodity prices and sturdy financial markets offered a sunnier outlook for the global economy which could dispel the gloom that had lingered since the Great Recession ended.

The warning appears to be aimed at President Trump's "America First" agenda and other protectionist polices. The Russian economy is expected to expand 1.4 percent this year instead of 1.1 percent, while 2017projections for China was raised to 6.6 percent from 6.5 percent.

"The economic upswing that we have expected for some time seems to be materializing", International Monetary Fund chief economist Maurice Obstfeld wrote in the report. The IMF now thinks this "points to a more gradual materialisation than previously anticipated of the negative effects of the UK's decision to leave the EU". Conditions for resource exporters are gradually expected to improve, supported by recovering prices for oil and other commodities, the International Monetary Fund said.

Japan's growth outlook for this year was doubled to 1.2% from 0.6% and the projection for next year was boosted to 0.6% from 0.5%.

  • Carolyn Briggs