IMF predicts global economic growth, citing influence of U.S. tax cuts

Jan. 22 (UPI) -- The International Monetary Fund's World Economic Outlook, released on Monday, says tax cuts in the United States will improve U.S. investment and help its trading partners.

The Washington-based IMF revised its global forecast upward, to 3.9 percent for both 2018 and 2019, a 0.2 percent improvement from its October prediction. It cited the new U.S. tax package, which while increasing the deficit, cuts corporate tax rates from 39 to 21 percent and reduces some individuals' tax payments.

"The revision reflects increased global growth momentum and the expected impact of the recently approved U.S. tax policy changes. The U.S. tax policy changes are expected to stimulate activity, with the short-term impact in the United States mostly driven by the investment response to the corporate income tax cuts," the January statement said. "The effect on U.S. growth is estimated to be positive through 2020, cumulating to 1.2 percent through that year, with a range of uncertainty around this central scenario."

It warned, though, that lower growth could be expected after 2022, after some of the temporary tax provisions end.

The World Economic Outlook also predicted 6.5 percent economic growth in Western Europe over 2018 and 2019; a continuance of five percent growth in developing Europe, with greater improvements in Poland and Turkey; Latin American growth of 1.9 percent in 2018 and 2.6 percent in 2019, with growth in Mexico offsetting the economic decline in Venezuela; continued 3.5 percent growth in the Middle East, and a 6.5 percent expected growth, over two years, in Asia.