IMF Optimistic on Global Economy

The International Monetary Fund is “optimistic” about the global economy as it readies a new set of forecasts to be published later this month, chief economist Maurice Obstfeld said, Bloomberg reported. “We’ve mostly seen positive surprises—in China and most of the advanced economies, including Europe,” Obstfeld told journalists in Paris. The IMF forecast in October that the world economy will grow 3.7% this year, the fastest pace since 2011. It will update its forecasts at the Davos gathering of world leaders later this month. One of the key issues the Washington-based fund is looking at is the potential effect of the recently approved tax cuts in the US, Obstfeld declined to discuss specifics of the impact on the IMF’s outlook because the fund hasn’t yet settled on its view. “In the short run, if the US grows more quickly because of fiscal stimulus, that will have a positive spillover for Europe,” he said. “In the longer term, it could cause financial worries that might be more negative” in relation to “risks of high levels of debt,” he said.