In contrast with the United Kingdom downgrade, the U.S. outlook for 2019 is upgraded from 1.9 per cent to 2.5 per cent, Germany from 1.5 per cent to 2 per cent and Canada from 1.7 per cent to 2 per cent.
Economic growth in China accelerated to 6.9 percent in 2017 from 6.7 percent in the previous year, largely thanks to public infrastructure investment and a property boom fuelled by credit expansion. It projected a growth of 7.8 percent in 2019-20.
"The revision reflects increased global growth momentum and the expected impact of the recently approved US tax policy changes", the Fund states in its latest World Economic Outlook update, referencing the corporation tax cuts pushed through the US Congress late a year ago.
Global growth, which had languished in the previous years, is steaming ahead as the U.S. economy continues to expand at better-than-expected rates and Asia and Europe continue to recover from the economic slump that marred the past years.
The IMF said it saw "a stronger push from external demand" and from exports on the Italian economy.
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The IMF said the cyclical upswing underway since mid-2016 has continued to strengthen. Projected U.S. growth was the highest among advanced economies.
Further growth of 3.5% is anticipated in 2019 on the back of a modest upgrade to the growth forecast for Nigeria while not much growth is expected from South Africa.
Global economy has been accelerating, but its current recovery is cyclical, International Monetary Fund head Christine Lagarde said.
The U.S. tax overhaul, particularly corporate income tax cuts, and associated fiscal stimulus will likely promote investment and improve the country's performance temporarily, driving up its demand for imports and benefiting trading partners such as Canada and Mexico, the International Monetary Fund said.
The IMF also warned that a financial-market correction could spoil the party - a possible scenario it raises amid "rich asset valuations and very compressed term premiums".
"Even as economies return to full employment, inflation pressures remain contained and nominal wage growth is subdued". It attributed the accelerating growth to "Modinomics", or economic reforms implemented by Prime Minister Narendra Modi.
An improving global growth outlook, weather events in the U.S., the extension of the Opec+ agreement to limit oil production, and geopolitical tensions in the Middle East have supported crude oil prices. In an environment of financial market optimism, ensuring financial resilience is imperative, the report said.