The global economy is picking up speed and momentum, but serious risks remain to growth the IMF announced in its World Economic Outlook report Tuesday in Washington.
“Things are really looking up at the moment. We have seen a string of good economic news since the middle of 2016 and we definitely see some momentum,” says IMF Research Department Director Maurice “Maury” Obstfeld.
“We expected growth to rise in 2016 but we are raising our outlook even beyond where we were a few months ago to 3.5 percent this year and 3.6 percent next year,” said Obstfeld.
Obstfeld also pointed to downside risks and headwinds that may slow global growth.
“An obvious one is protectionism and retaliatory responses to that. But there are other risks, very strong appreciation of the dollar could lead to financial tightening, which would have adverse effects on emerging markets,” said Obstfeld.
The IMF report also points to the need for policy makers to pursue programs that help people cope with shifting trade patterns and seek ways to reduce income inequality.
“Policy makers really need to raise their game in several respects. The open world trading system has promoted growth over decades, especially in emerging markets but the gains have been distributed too unequally as have the costs to adjustment to changing technology and changing trade,” he said.
“They need to think about policies that will equip workforces for structural transformation, help them to adjust to all sorts of dislocations and to remain productive,” said Obstfeld.