IMF says world economy growing although inequality putting pressure on society

The world economy is gaining strength and extending the broadest recovery since the start of the decade even as issues such as inequality threaten to fray the fabric of society, International Monetary Fund Managing Director Christine Lagarde said.

The IMF’s updated global forecast will likely be “even more optimistic” when it’s released next week, Lagarde said in a speech on Thursday at Harvard University. The IMF will release its World Economic Outlook on October 10 at its annual meetings in Washington. In July, the fund projected the global economy will grow 3.5 per cent this year and 3.6 per cent in 2018.

A “cyclical pickup” in investment and trade in advanced economies, especially in Europe and Japan, is creating better-than-expected growth, Lagarde said. US growth will be “above trend” this year and next, though forecasts are fluid due partly to the shifting prospects of tax reforms, she said.

Nearly three quarters of the world is “experiencing an upswing” in terms of gross domestic product, and the result is the broadest-based acceleration in global growth since the start of the decade, according to the Washington-based fund.

Led by China and India, Asian emerging markets remain strong, while the outlook has become “a bit brighter” in other emerging and developing economies, including commodity exporters in Sub-Saharan Africa and Latin America, she said.

“We are seeing some sun break through,” Lagarde said in prepared remarks of her speech. “But it is not a clear sky.”