IMF warns of growing risks to improving global recovery

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The International Monetary Fund expects Canada's economy will improve compared with past year, but not as much as the Bank of Canada predicted last week following unexpectedly robust growth on several fronts.

Among the developed economies, the US economy is expected to grow by 2.3 percent in 2017 and 2.5 percent in 2018, the same forecast as that in January; the growth forecast for the euro-zone was raised by 0.1 percentage points to 1.7 percent in 2017; the Japanese economy is expected to grow by 1.2 percent in 2017, 0.4 percentage points higher than its January forecast, with growth slowing to 0.6 percent in 2018.

In its World Economic Outlook, published on Tuesday, the Fund argued that growth in Greece this year will come to 2.2 percent against a forecast of 2.8 percent last October, but this will not put the sustainability of the country's debt at risk.

"Acceleration will be broad based across advanced, emerging, and low income economies, building on gains we have seen in both manufacturing and trade", Obstfeld said.

The IMF put China growth this year at 6.6 percent, up a tenth of a point. Plummeting oil prices forced energy companies to slash production. Those and other headwinds are expected to keep world growth capped at 3.8% for the foreseeable future, according to the IMF's long-term outlook.

Its UK growth forecast was significantly boosted from 1.5 percent to 2.0 percent this year, slowing to 1.5 percent in 2018.

"Higher commodity prices have provided some relief to commodity exporters and helped lift global headline inflation and reduce deflationary pressures", the International Monetary Fund said.

Oil prices have surged almost 40 percent in the past year, partly because oil-producing countries agreed to curb production. Investors expect the Chinese government to continue supporting economic growth. The forecast for the unemployment rate remained unchanged.

However, the International Monetary Fund warned that risks to global growth remain to the downside with structural issues holding back economic development.

Numerous concerns - including rolling back financial regulation, pulling away from the multilateral trading system and restricting immigration - are centerpieces of US President Donald Trump's policy program, but also are issues visible in the bitter French election campaign, as well as in Britain's planned exit from the European Union.

The report warns of the "significant downside risks" to the outlook, which have gotten worse since January - among them, "the turn towards protectionism, leading to trade warfare", Obstfeld said in the foreword of the report. But Bob Baur, chief global economist at Principal Global Investors, noted that Trump has retreated from those threats: His administration declined last week to accuse China of undervaluing its currency. Trump officials say other countries' tariffs, taxes and other barriers have fueled trade deficits with most of the country's biggest trade partners at the expense of US workers.

Wealthy economies also face deeper problems, in particular chronically weak growth in productivity - the output produced per hour of work - and aging workforces.

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