Global growth is strengthening and is broad-based, but pockets of negative growth and concern over debt-levels mean that policy makers must not be complacent, the IMF announced in the latest World Economic Outlook Tuesday.
“We are really pleased to be able to raise our growth forecast for this year and next year by point one percent in each case. We expect global growth this year to be 3.6 percent and next year 3.7 percent,” IMF Research Department Director Maury Obstfeld announced.
The report says that strength in the euro area, Japan, emerging Asia, emerging Europe and Russia are powering the boost and more than offset downward revisions in the United States and Great Britain.
“It's hard not to be excited about that because it is a very broad-based recovery. We see it in advanced economies, in emerging Asia, in emerging Europe including in Russia."
Obstfeld had some words of warning against complacency in the current growth environment.
"There are very obvious geopolitical risks, but also asset prices may be stretched creating the risk of re-pricing, there are risks from volatile capital flows as central banks re-normalize and as the (U.S.) Dollar may appreciate. Perhaps the biggest risk is that policy makers don't use this opportunity to do strong reforms."
Obstfeld laid out a three-pronged approach to dealing with challenges.
“First and foremost it is a great opportunity for structural reforms. Fiscal policy has a role to play, and particularly it can move toward consolidation in some cases if it moves gradually. Inflation remains puzzlingly low so it is important for monetary policy as it normalizes to remain cautious,” the IMF’s chief economist added.
“And finally financial stability remains on the agenda. It's important to move forward and not to backtrack."
A full copy of the report can be found at IMF.org.