As shown in Chart 1, the world economy is projected to grow at 3.9 per cent in both 2018 and 2019, up from 3.7 per cent in 2017. Growth is likely to be driven by emerging markets and developing economies, with the IMF noting that the rate of expansion in economic activity appears to have peaked in some major economies.
As shown in Chart 2, emerging economies are expected to grow at 4.9 per cent in 2018, up from 4.7 per cent in 2017. For 2019, the Fund projects growth of 5.1 per cent. By comparison, economic activity in advanced economies is expected to slow to 2.2 per cent in 2019 from 2.4 per cent in 2018.
As seen in Chart 3, the US economy is expected to grow at 2.9 per cent in 2018, up from 2.4 per cent in 2017. However, growth is expected to slow to 2.7 per cent in 2019. In the euro region, growth is likely to have peaked in 2017 at 2.3 per cent.
For India, the IMF has lowered its earlier forecast for FY19 by 0.1 percentage point to 7.3 per cent on account of higher oil prices and tighter monetary policy. It has also lowered its FY20 forecast by 0.3 percentage points to 7.5 per cent (Chart 4).
The Fund also notes recent tariff hikes by the US and the retaliatory measures thereafter have increased the likelihood of escalating trade actions.
As seen in Chart 5, it has lowered its forecast for world trade growth from 5.1 per cent in 2017 to 4.8 per cent in 2018 and further to 4.5 per cent in 2019.
The sharp rise in oil prices (Chart 6) has lifted headline inflation in both advanced and emerging economies.
As shown in Chart 7, inflation in emerging economies is projected at 4.4 per cent in 2018, up from 4 per cent in 2017, while for advanced economies, it is likely to rise to 2.2 per cent, up from 1.7 per cent.
StatsGuru is a weekly feature. Every Monday, Business Standard guides you through the numbers you need to know to make sense of the headlines; Source: World Economic Outlook, July 2018, International Monetary Fund