“The International Monetary Fund on Monday said the U.S. economy would grow faster than previously expected in 2017 and 2018 based on the incoming Trump administration’s tax and spending plans,” David Lawder reports for Reuters, “but it kept its global growth forecasts unchanged due to weakness in some emerging markets.”
“Updating its World Economic Outlook, the IMF forecast overall global growth at 3.4 percent for 2017 and 3.6 percent for 2018, unchanged from October,” Lawder reports. “That compared to 3.1 percent in 2016, the weakest year since the 2007-2009 financial crisis.”
“The new IMF outlook does not include any assumptions regarding Trump’s trade plans, such as potential tariffs on Mexican and Chinese goods, as there seems to be less of a political consensus surrounding them, [IMF chief economist Maurice Obstfeld] said. The IMF does assume a stronger dollar, firmer oil prices and ‘more inflationary pressure and a less-gradual normalization of U.S. monetary policy,'” Lawder reports. “[The IMF] noted there was potential for upside growth surprises if policy stimulus in the United States or China turned out to be larger than currently projected. It said it expects more certainty over the direction of U.S. policy by the time of the next full World Economic Outlook in April.”
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“The new forecast represents a boost of 0.1 percentage point this year and an increase of 0.4 percentage point for 2018, when Trump’s stimulus plans would be expected to be phased in,” AP reports. “That is a half-point higher growth than the IMF was forecasting in October, before Trump’s election.”
“‘We now have the presidency and the legislative branch in the same hands. It seems very clear to us that some of the promises will be delivered on,’ Obstfeld said. ‘We know the direction of policies. We don’t know the specifics,'” AP reports. “He said that the IMF had chosen not to incorporate Trump’s threats of imposing higher tariffs on countries such as China and Mexico if their trade policies do not change because of a belief ‘that at the end of the day, countries will realize these are not in their best interests given the threat of retaliation. … The outbreak of a trade war would be quite destructive.'”
“While Trump’s election victory boosted economic prospects in the United States, the impact has been uneven for the rest of the world,” AP reports. “Some countries could see stronger growth from the increase in activity in the United States, the world’s largest economy, but some emerging market countries may face challenges as global interest rates rise.”
Read more in the full article here.
MacDailyNews Take: Good news for Apple’s second largest market. It’ll be extremely interesting to see how this all (corporate taxes, trade policy, stimulus, manufacturing, import/export tariffs, etc.) shakes out for multinationals like Apple.