The International Monetary Fund (IMF) revised its 2018 World Economic Outlook (WEO) and raised its forecast for global growth to 3.9 percent this year due to US tax cuts.
The change is up 0.2 percentage point from its projection in October, the fastest rate since 2011 when the world rebounded from the financial crisis.
The revision was driven by the new US tax policy which is expected to "stimulate activity" with short-term impacts due to the investments that will come out of its corporate tax cuts. The effect on the US is estimated to increase through 2020, at 1.2 percent, the IMF detailed Monday.
These reforms with not only impact the US but also its trading partners and will account for about half of the global growth for this year and the next.
There were a small number of forecasts that were lowered for individual countries in which the largest negative change was added to South Africa. For 2019, the downgrade is 0.7 percent which the IMF says reflects its increased political uncertainty and its effects on investment.
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The UK's forecast was lowered 0.1 percent for 2019 but nonetheless it is expected to have a growth of 1.5 percent this year and next.
From a policy perspective the IMF says an increase in trade barriers, as a result of Brexit negotiations, is a potential risk to the outlook.
"A failure to make growth more inclusive and the widening of external imbalances in some countries, including the United States, could increase pressures for inward-looking policies," it said.
