International Monetary Fund reviews Ukraine's GDP downward growth forecast for 2019

International Monetary Fund reviews Ukraine's GDP downward growth forecast for 2019

"Continuing to power the world economy's upswing are accelerations in investment and, notably, in trade", he said. Higher barriers to trade and lower foreign direct investment following Brexit next year would prevent Britain from performing better, it said.

Even with the sluggish outlook for the United Kingdom, however, the fund recommended the Bank of England raise interest rates to keep a lid on stubbornly high inflation.

For 2018, the International Monetary Fund has raised its growth forecasts, with the euro area forecast to grow by 2.4% this year, up from a previous estimate by 0.5%.

However the prospects for emerging markets remain more positive in the medium-term and will remain close to 2018 / 2019 levels due to the rise in commodity prices and an increase in India's growth, offset by the slowdown in China.

He says the reason for the deficit is that total spending in the USA exceeds income.

The report kept the global growth rate projections at 3.9 percent for this year and the next that was made in January.

The 2017 recapitalisation plan for major public sector banks will "improve the banking sector's ability to support growth", the report said.

Referring to the projected growth rate for India in 2018 and 2019, which is higher than that of the previous year of 2017, the International Monetary Fund explained this is due to the strong private consumption as well as fading transitory effects of the currency exchange initiative and implementation of the national goods and services tax. For next year, the forecast has been slightly reduced, to 1.5%.

In Saudi Arabia, the biggest Arab economy which contracted 0.7 per cent previous year, 2018 growth was revised up to 1.7 per cent, a 0.1 percentage point increase from the January projections.

"While some governments are pursuing substantial economic reforms, trade disputes risk diverting others from the constructive steps they would need to take now to improve and secure growth prospects", he said.

Escalating trade restrictions and retaliation is another risk to the outlook, it said, noting the first shots in a potential trade war involving the United States have now been fired.

Obstfeld said there was more of a "phoney war" between the USA and China than a return to the widespread use of tariffs in the Great Depression, but that there were signs that even the threat of protectionism was already harming growth.

Voters' disillusionment raises the threat of political developments that could destabilize a range of economic policies in the future, reaching beyond trade policy, he added.

"Fights over trade distract from this vital agenda, rather than advancing it", Obstfeld said.

"We have several issues on the agenda now".