Low wages are causing public to lose faith in governments, International Monetary Fund warns


Exports of Apple's iPhone accounted for a quarter of Ireland's economic growth on a valued-added basis in 2017, a new study from the International Monetary Fund (IMF) reveals.

Inflation is already above the government and Bank of England's target of 2%. The IMF predicts oil prices will average about US$62 a barrel in 2018, compared with an estimate of about US$52 a barrel in October.

The International Monetary Fund projects moderate economic growth for Canada this year and next, albeit at a rate lower than last year's and significantly slower than in the United States.

In its biannual World Economic Outlook, IMF kept its GDP growth forecast for India unchanged at 7.4% for 2018-19 and 7.9% for 2019-20, holding that economic activity will be lifted by strong private consumption as well as fading transitory effects of demonetisation of high-value currencies and implementation of the national goods and services tax (GST). -China trade restrictions threaten to damage a steady global growth picture, but there was still time for the world's two largest economies to step back from the brink.

Assets tied to cryptocurrencies don't pose an immediate danger to the global financial system because their footprint is still small, and they have limited links to the rest of the financial system, although they have the potential to magnify the risks and increase the transmission of economic shocks, according to IMF's preliminary assessment. If the government's broader housing policy agenda is fully implemented, that "would address most of the potential problems associated with foreign buyers on a less discriminatory basis", it said. The list could include infrastructure, education programs that prepare children and older workers for the digital economy, and efforts that increase the labour participation rates of women and youth. Still, it is fair to ask if they are getting the most out of their deficits, as budget season included a lot of spending that will have no obvious impact on productivity.

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House attributes the rosier USA outlook to federal tax cuts, a massive US$300-billion spending package and the possibility of an additional spending or infrastructure bill.

"And because the USA boost accounts for most of the higher world expansion, beyond 2019 "global growth is projected to gradually decline to 3.7% by the end of the forecast horizon", the report said".

The IMF has also strongly criticised the approach of the Trump administration to trade deficits.

However, it warned that performance could be curtailed by trade barriers. That is about 4.8 per cent of the world's foreign exchange reserves - and bigger than Singapore's reserves, which are the 12th biggest in the world, being valued at around US$282 billion according to Trading Economics.

Maurice Obstfeld, Economic Counsellor and Director of the Research Department, IMF said that the world economy continues to show broad-based momentum. Smart policy makers will begin preparing for that possibility immediately.