The International Monetary Fund says the global economic outlook is “brightening,” but warns that “protectionism” and geopolitical tensions could hurt economic growth.
The IMF published the report Tuesday, ahead of this week’s gathering of top economic officials from around the world for meetings of the World Bank and the IMF.
The IMF’s Maurice Obstfeld told journalists that global growth will probably accelerate from a 3.1 percent annual rate in 2016 to 3.6 percent in 2018. He says commodity prices have “firmed” since early last year, but at a relatively low level. That leaves commodity exporters in the Middle East, Africa and Latin America with challenges. He also says bad weather and civil unrest mean several low-income nations face mass starvation.
In the report, economists say there are many “downside risks” including political pressure to restrict trade, which they argue will hurt rather than help growth. The report’s authors say slow and unequal income growth, meager growth in productivity, the financial crisis, and other problems have generated political support for “zero-sum” approaches to trade. Obstfeld says nations that pull out of the multilateral trading system could suffer a “self-inflicted wound.”
The IMF says in many cases, wages have not kept up with rising productivity, and labor’s share of national incomes has dropped. These experts urge policymakers to do more to ensure that the gains from growth and trade are shared more widely. What will help, they suggest, are tax changes, investments in skills, and efforts to make it easier for workers to move to find new opportunities.