IMF Upgrades Global Growth Outlook But Singles Out Britain As A "Notable Exception"

Tyler Durden's picture

Confirming the shift to a more optimistic worldview by IMF unveiled last week by Christine Lagarde, in its latest World Economic Outlook released on Tuesday, the IMF raised its 2017 and 2018 GDP growth forecast for the U.S., China, euro area and Japan as follows:

  • Global GDP to expand 3.6% in 2017 and 3.7% in 2018, up from July estimates for 3.5% this year and 3.6% next
  • U.S. to grow 2.2% this year, up from July est. of 2.1%
    • U.S. to grow 2.3% in 2018, up from July est. of 2.1%
  • China to grow 6.8% this year, up from July est. of 6.7%
    • China to grow 6.5% in 2018, up from 6.4% in July est.
  • Euro area to grow 2.1% this year, up from 1.9% in July est.
    • Euro area to grow 1.9% in 2018, up from 1.7% in July est.
  • Japan to expand 1.5% in 2017 and 0.7% in 2018, up from July est. of 1.3% and 0.6% respectively

“Growth in most of the other advanced economies, with the notable exception of the UK, picked up in the first half of 2017 from its pace in the second half of 2016, with both domestic and external demand contributing,” the IMF said in its World Economic Outlook.

Having troughed in late 2016, the IMF's 2017 growth forecast is now well off the lows, and is back to a level last seen in the first quarter of 2016.

Also notable is that the IMF boosted its all important global trade volume (goods and services) forecast, to 4.2% and 4.0% growth in 2017 and 2018 and up 0.2% and 0.1% respectively from the previous forecast, the IMF also cuts it advanced economy inflation outlook by -0.2% and -0.1% for 2017 and 2018 to 1.7% and 1.7%, for the next two years. Similarly it also cut its EM inflation forecast to 4.2% (-0.3%) and 4.4% (-0.2%). While the IMF now expects a 17.4% increase in oil prices in 2017, it then expects a slight moderation by -0.2% in 2018.

The full breakdown is below:

The IMF also encouraged countries to take advantage of the benign climate to boost growth potential and cushion the impact of the next downturn, something it has done during the publication of every previous WEO report in the recent past. The IMF also urged central banks in rich nations to keep monetary policy loose until there are firm signs of inflation.

To be sure, it was not all rosy: there was this warning from IMF Chief Economist Maurice Obstfeld: “A closer look suggests that the global recovery may not be sustainable - not all countries are participating, inflation often remains below target with weak wage growth, and the medium-term outlook still disappoints in many parts of the world."

And while the IMF was quite optimistic on the rest of the world, it singled Britain out as a “notable exception” to an improving global economic outlook on Tuesday, as it cut its forecast for UK growth and said the long-term negative effects of Brexit were beginning to show.

“The UK, where the strong depreciation of the pound since last summer has passed through into higher consumer prices, is an exception to this pattern [of low inflation in other countries].”

The IMF cut the UK’s growth forecast for 2017 by 0.3% to 1.7%, well below the average growth rate in other advanced economies. The fund also sharply reduced its estimate of the UK’s long-term growth outlook.

While the IMF expects the global economy to accelerate next year, it is predicting a further slowdown in the UK, to 1.5 per cent growth, for 2018. The IMF’s projection is broadly in line with consensus, but significantly more optimistic than the recent 1 per cent growth forecast by the Organisation for Economic Co-operation and Development.

The IMF maintained that Mr Hammond will be able to keep to his self-imposed rule to bring borrowing down to 2 per cent of national income by 2020-21. But the fund increased its forecasts for the deficit in Tuesday’s report, saying it now expected the UK’s structural deficit to be 1.2 per cent of national income in 2021.

As the FT notes, the IMF’s forecasts are slightly more optimistic than the current consensus, but are unlikely to offer cheer to Philip Hammond, the chancellor, as he travels to Washington for the annual IMF meetings this week. Eurosceptics have called for Mr Hammond to be sacked, believing that his pressing for a long post-Brexit transition period from EU membership amounts to effective resistance to leaving the bloc.

The IMF said the squeeze on household finances in the UK had hit growth in the first two quarters of this year, and “the medium-term growth outlook is highly uncertain and will depend in part on the new economic relationship with the EU and the extent of the increase in barriers to trade, migration and cross-border financial activity”.


Mr Obstfeld said he sympathised with the “harsh trade off” facing the Bank of England as it ponders whether to raise interest rates at its November meeting.


“It’s hard to judge to what extent above target inflation could feed through into nominal wages and complicate things,” he said. “At some level the BoE is in the position you don’t want to be in as a central banker where you’re facing a negative supply shock which directly brings your inflation mandate into conflict with what is possibly better in terms of economic growth.”

Maurice Obstfeld, chief economist at the IMF, said the reduction in the fund’s long-term outlook for the UK from an annual growth rate of 1.9 per cent to 1.7 per cent was a direct consequence of leaving the EU. “We forecast in the pre-referendum period, as did others, there would be long run negative effects on the British economy,” he said. “I think we’re starting to see those."

And let this be a warning, the IMF felt like adding but did not, to all those other countries who dare to think that their lives will be better outside the Eurozone or EU rather than in it...

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FreeShitter's picture

The IMF like Jim Richards has never been right....hedge accordingly.

ThaBigPerm's picture

Notable exception soon to include Catalonia.  Any coincidence is in your own mind...

YUNOSELL's picture

IMF fat shaming Britain for their Brexit overindulgence

fx's picture

Now, if some Russian province were to seperate, I am sure as hell the IMF would instantly project exponential growth for said territory for at least the next 200 years.

Ghost of PartysOver's picture

So, the whole world is awesome except the Brexit.  If you have ever wondered if the IMF is a political operative then this should answer you question.

skbull44's picture

IMF must know central banks are but to reverse quantitative tightening and inject even more free money into the markets...

DaNuts's picture

What has happened to the banks that said that they were leaving the UK because of Brexit? Still here guys?


Cash2Riches's picture

What a joke, I take nothing that these fools state as serious. The world is destined for a massive correction, but then, yes it will bloom as it regrows under a new system. We are going through a massive transition period, one that is going to change history for ever. It won't come without growing pains however.

grasha87's picture

Rickards is also wrong about free trade. I refute his new book, The Road to Ruin, here:


The IMF are a bunch of trough feeding leeches.

manasaputrah's picture

Sounds like the IMF is displaying some resentment.

Panic Mode's picture

That's IMF we are talking about. Based on their track records, the real outcome is that the global outlook is down except Britain.

Doom and Dust's picture

Canada's population grew by 0.90% in 2017. Discount population growth and Germany, Japan and Italy are all growing faster than the US.

GodHelpAmerica's picture

The globe is growing at an exceptional rate if we continue to grossly underreport inflation.

Financial repression until the western middle class is completely destroyed.

ejmoosa's picture

Guess there's gonna be a new war soon...

NMA's picture

Thats what they said ? - I guess everyone is screwed except Britain then.. 

Don Pancho's picture

Weres my gold painted roads :(

GreatUncle's picture

This is all a play ... the IMF in cahoots with the UK goverment manipulating the position to keep the UK in the EU.

HARD BREXIT and pull the plug then lets see who is smiling.

As for the IMF the globalist controlled institution that predicted in 2020 the Greek debt / GDP ratio would be 120% ... you have 2 years to achieve that.

Not a chance in or out of the EU the whole global economy is a fraud of money printing to keep those globalists in the position they are accustomed to and the only way to shake them off is to flip the whole world into a new dark age. You will wish it in the end ... but take your time the globalists are going nowhere.

Grandad Grumps's picture

Meaningless crap! I hope someone didn't waste a whole morning creating it.

Silver Savior's picture

They deserved to have their morning wasted if this was on their mind.

adonisdemilo's picture

We can live with that, the IMF are a bunch of "know all, fuck all" academics.

They said, numerous times, that we were destined to join the third world if we voted FOR Brexit.


LawsofPhysics's picture

LOL!  Britian is having another pint and really doesn't give a fuck.

Silver Savior's picture

Could someone please tell me how further growth is possible with a mess of a financial system and finite resources? ................ Someone is telling some mighty tall tales.

Silver Savior's picture

Follow thee yellow brick road. No, literally.

Son of Captain Nemo's picture

What happens when the 'thieves" vision(s) don't always fall into place. Case in point (

And my only question is "why" is the Nigger in this picture smiling considering his own "achievement" and what he wound up doing to his own economy in 8 years serving as a proud member of the war crimes party!

toadhall's picture

Thanks IMF. I was beginning to think we were in a spot of bother over brexit. No more.


Pinot-Noir's picture

You can rebuild an economy in time, CAN'T rebuild a culture!!



artichoke's picture

Britain is failing economically but growing in its service to Allah!  Surely that's more important isn't it? /s

grasha87's picture

I have been reviewing books on my Youtube channel on Austrian Economics and there is more to come. Here is my latest book review -

RedDwarf's picture

The IMF has no idea what the long term effects of Brexit will be economically.  Sure there are short and even medium term downsides.  There is uncertainty and the breaking apart of current agreements.  That will always cause a hit.

To say from that what the long term effects will be however is at best grossly stupid, and at worst intentional lying.  My money is on the latter of course.  The IMF, like the EU, is a front for globalists.  It serves the IMF's goals to have the world centralized under the same currencies and banking system.  They are NOT a neutral third party here.

Brexit puts the power back into the UK's hands.  What the citizens and elites do with that power is what will determine the long term economic, cultural, and social health of the UK.

DaNuts's picture

Europe is finished, it will colapse without UK aid.

The UK has been trading with the rest of the world for centuries, it is not going to just stop.