By Isaac Cohen*
At the spring meetings of the International Monetary Fund and the World Bank, held in Washington last week, there was no celebration of the global economic upswing which started in the second half of 2016. As indicated by the World Economic Outlook, the Fund’s flagship publication, global growth is projected to reach 3.9 percent in both 2018 and 2019, an upward revision of last October projections. The impulse comes mainly from output acceleration in the euro area, Japan, the United States and China, with the consequent recovery among commodity exporters contributing to improvements in the performance of emerging and developing economies.
Such strong growth was not seen since 2010. However, as indicated by the Fund’s Economic Counsellor and Director of the Research Department Maurice Obstfeld, “there are notable risks to the outlook.” Monetary policy may be tightened sooner, particularly in the United States, due to the adoption of an expansive fiscal policy with almost full employment. In a context of historically high global debt levels, higher interest rates will lessen capital flows and will cause debt servicing strains. The other risk is already here, although not yet with full intensity, with the escalation of trade restrictions and retaliation.
These were the risks which tempered the enthusiasm, at the spring meetings, to celebrate the upswing in global economic growth.
*International analyst and consultant, former Director ECLAC Washington Commentator on economic and financial issues for CNN en Español TV and radio, UNIVISION, TELEMUNDO and other media.
