With regards to the United Kingdom, the International Monetary Fund highlighted a decline in growth rate, from 1.7 percent in the current year to 1.5 percent in 2018, in lieu of the political turmoil stirred due to the Brexit and other factors, reports Bloomberg.
The fund left its forecast for global growth unchanged in the latest quarterly update to its World Economic Outlook, released on Monday (July 24) in Kuala Lumpur.
"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", Obstfeld said.
The IMF said growth in the euro zone was now expected to be slightly stronger in 2018 and pointed to "solid momentum".
With regards to growth in the Middle East, North Africa, Afghanistan and Pakistan region, growth was maintained at 2.6 per cent for this year, but lowered by 0.1 per cent to 3.3 per cent for next year as the oil price outlook remains cloudy.
"While the markdown in the 2017 forecast reflects in part the weak growth outturn in the first quarter of the year, the major factor behind the growth revision, especially for 2018, is the assumption that fiscal policy will be less expansionary than previously assumed, given the uncertainty about the timing and nature of United States fiscal policy change", the fund said in its update to the World Economic Outlook.
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United Kingdom growth forecast for 2018 remains unchanged at 1.5%.
China's "higher growth is coming at the cost of continuing rapid credit expansion and the resulting financial stability risks", Obstfeld warned in his prepared statement.
At the same time, however, the IMF cautioned that faster-than-expected monetary policy normalization by the U.S. Federal Reserve could tighten global finance and trigger reversals in capital and investment flows to emerging economies.
That has been fueled in part by the fact the benefits of increased growth have not been broadly shared.
"Core inflation pressures remain low in advanced economies, and measures of longer-term inflation expectations show no indications of upward drift beyond targets, so central banks should continue to proceed cautiously", Obstfeld said.
That "not only holds back the improvement of living standards, but also carries risks of exacerbating social tensions that have already pushed some electorates in the direction of more inward-looking economic policies".
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