The International Monetary Fund has issued its World Economic Outlook Update. While its experts commented that the global economy is in good shape, it posted new warnings that reflect the chance of global trade war. The analysis also showed the U.S. economy is in good shape and at least as strong as other economists expect.
Worldwide, its gross domestic product (GDP) forecast reflects its opinion of a 3.9% increase this year and next. The economies that matter most outside the United States should have results that will not show any significant risk of recession. China’s economy is expected to expand 6.6% this year and 6.4% next. While this does not measure up to the past several years, it is hardly a disaster. India, now the world’s hottest economy, is expected to post a 7.3% improvement in GDP this year, rising to 7.5% in 2019.
Among the old-world economies, Germany’s GDP is forecast to be up 2.2% this year, falling to 2.1% in 2019. This is a dip from recent numbers. The U.K. economy will be undermined by the effects of Brexit, up only 1.4% this year and 1.5% in 2019. Japan’s economy appeared headed for recovery after many stagnant years, but it will not. Its economy is expected to rise 1.0% this year and only 0.9% the next.
The United States, given its massive size, will be a primary engine of global GDP health. The IMF experts write:
Growth remains generally strong in advanced economies, but it has slowed in many of them, including countries in the euro area, Japan, and the United Kingdom. In contrast, GDP continues to grow faster than potential and job creation is still robust in the United States, driven in large part by recent tax cuts and increased government spending.
This may decelerate beyond 2019, says the IMF research report, but it is so far away that an accurate forecast is impossible to make.
The odds of a recession, which have cast a shadow due to recent trade threats and worries that wages have not grown for years, have not been high enough to turn the IMF’s view toward pessimism, at least as far as the U.S. economy is concerned.
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