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IMF: Global economic recovery on more secure footing

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WASHINGTON: The global economic recovery is on firmer footing as improving growth in China, Europe and Japan offset downward revisions for the United States and Britain, the International Monetary Fund (IMF) said yesterday.

However, wage growth remains sluggish, which risks increasing tensions that have pushed some countries towards more anti-global policies.

Meanwhile, efforts to erode financial regulations put in place since the 2008 crisis could erode stability, the IMF warned.

"The recovery in global growth that we projected in April is on a firmer footing; there is now no question mark over the world economy's gain in momentum," IMF chief economist Maurice Obstfeld said.

Presenting the latest update of the World Economic Outlook (WEO), he said "recent data points to the broadest synchronised upswing the world economy has experienced in the last decade". The fund still expects the global economy will grow by 3.5 per cent this year and 3.6 per cent in 2018, the same as in the April WEO.

However, the unchanged forecast masks some significant revisions, including in the US, where the IMF downgraded its growth estimate last month after judging that spending plans promised by President Donald Trump that had been expected to provide an economic boost were stuck in limbo.

The US estimate was cut to 2.1 per cent for this year and next, down 0.2 points and 0.4 points, respectively, from the forecast in the last report.

The outlook for the British economy was also revised down by 0.3 points to 1.7 per cent this year on weaker-than-expected activity in the first quarter, while the impact of Brexit "remains unclear".

But those downward revisions were offset by the improving outlook in key economies, including the euro area where growth prospects have improved in France, Germany, Italy and Spain. - AFP