Strong start to 2017 bodes well for Canada, International Monetary Fund says

U.S. Vice President Mike Pence arrives with U.S. Gen. Vincent Brooks second from right commander of the United Nations Command U.S. Forces Korea and Combined Forces Command and South Korean Deputy Commander of the Combined Force Command Gen. Leem Ho-y

The International Monetary Fund, in its flagship report on the state of the global economy, nudged up its forecast for world growth this year a tenth of a percentage point to 3.5%, which will be the fastest rate in five years if the IMF is correct.

Egypt's real gross domestic product will expand 3.5 percent this year, less than the IMF's 4 percent projection in October, the lender said in its latest World Economic Outlook on Tuesday. The IMF's latest outlook for 2017 is a slight upgrade from the 3.4 per cent global growth it had forecast in January.

"The world economy may be gaining momentum, but we can not be sure that we are out of the woods", said Mr. Obstfeld.

Beijing has said it wants to reorient the economy away from relying on exports and debt-fuelled investment towards a consumer-driven growth model, but the transition has proved challenging and led to slower expansion in recent years. The IMF believes euro zone growth will then slow to 1.6% in 2018. In March, after an International Monetary Fund technical mission visited Belgrade, the institution raised the growth forecast to 3 percent.

The IMF forecasts that growth will remain strong in China and many other commodity importers, with activity also projected to pick up "markedly" in emerging markets and developing economies.

Australia's unemployment rate is set to plunge from 5.9 per cent to 5.2 per cent, well below the 5.5 per cent forecast in the December budget update.

"Whether the current momentum will be sustained remains a question mark", Obstfeld explained.

"Acceleration will be broad-based across advanced, emerging, and low income economies, building on gains we have seen in both manufacturing and trade", he said.

Trump campaigned on an "America First" trade policy, vowing to brand China a currency manipulator and to renegotiate - or tear up - the North American Free Trade Agreement with Canada and Mexico.

However, Obstfeld warned: ""Capitulating to those pressures would result in a self-inflicted wound", which would harm countries by pushing prices higher and eroding household income, prompt retaliation, and worsen the global economy".

"These problems could, in turn, spill over to other countries", Obstfeld said.

Threats to global trade and integration, however, were given the most emphasis by Obstfeld.

Global trade has fostered "economic miracles" around the world, driving growth and lifting millions out of poverty, he stressed.

Numerous concerns - including rolling back financial regulation, pulling away from the multilateral trading system and restricting immigration - are centerpieces of US President Donald Trump's policy program, but also are issues visible in the bitter French election campaign, as well as in Britain's planned exit from the European Union.

The reference to the threats posed by protectionist choices in the United States is clear.

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