Global Economy 

Global economy

Global Economy

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It forecasts a 2. 7% expansion by 2025. But uncertainty about Trump’s long-term policies hangs over the global economic trajectory.

By Danielle Kaye

The U.S. economy is on track to grow faster this year than previously expected, the International Monetary Fund said on Friday, citing strength in the labor market and an acceleration in investment.

The I.M.F. projects 2.7 percent U.S. economic growth in 2025 in its latest World Economic Outlook report, up from an estimate of 2.2 percent. That stands in stark contrast to reduced growth projections for the euro area, which the fund attributed in large part to weakness in the manufacturing sector and heightened political uncertainty.

“The big divergence is the divergence between the United States and the rest of the world,” Pierre-Olivier Gourinchas, the IMF’s lead economist, said on a call with reporters this week. “We have stronger production expansion prospects in the United States than before the pandemic, and weaker expansion prospects in other regions, such as the eurozone or China. ”

The Fund’s new economic forecast released Friday builds on its October analysis, which showed that fears of a post-pandemic global contraction appear to have been put to rest, even as expansion remains sluggish in many countries. IMF economists expect global production to grow. up to 3. 3% this year and next, according to the updated report, above the fund’s previous projections.

But newly elected governments around the world are widening political uncertainty, posing dangers that could adjust the trajectory of the global economy in the coming months, the IMF charged.

These wild cards are especially serious in the United States, where the tax cuts, deregulation, price lists and immigration restrictions proposed by the new Trump administration may simply cause inflation. All of these proposals have one detail in common, Gourinchas said: They are about to generate pressure on prices.

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