London: Global economic growth is expected to pick up this year and in 2018, despite the political uncertainties created by Brexit and the election of maverick US President Donald Trump. And the International Monetary Fund has issued an encouraging growth forecast for the Australian economy, compared to the Treasury's most recent predictions issued in December.
The IMF predicts Australia's economy will grow by 3.1 per cent in 2017 and 3 per cent in 2018. This is better than the most recent forecast by the Australian Treasury and released by the Australian government in December last year, which predicted GDP would "pick up to 2¾ per cent in 2017-18 as the detraction from mining investment eases."
![Maurice Obstfeld, chief economist at IMF, speaks at a world economic outlook news conference.](http://web.archive.org./web/20180418144036im_/https://www.fairfaxstatic.com.au/content/dam/images/g/v/n/d/c/g/image.related.articleLeadwide.620x349.gvnd6x.png/1492549711439.jpg)
World growth is forecast to rise from 3.1 percent in 2016 to 3.5 percent in 2017 and 3.6 per cent in 2018 the International Monetary Fund said on Tuesday, as it published its twice-yearly health check of the global economy.
The IMF said it is possible short-term growth "could indeed surprise on the upside," if confidence and market sentiment driven by a recovery in commodity prices, buoyant financial markets and deregulation in the US.
![Christine Lagarde, managing director of the International Monetary Fund (IMF), at the Institute of International Finance ...](http://web.archive.org./web/20180418144036im_/https://www.fairfaxstatic.com.au/content/dam/images/g/v/0/z/c/3/image.related.articleLeadwide.620x349.gvnd6x.png/1497873771774.jpg)
But the organisation warned the structural problems of low productivity and high income inequality were likely to persist, and it cited "inward-looking policies" as threatening the global economic order and called for a renewed "multilateral effort."
But despite the political upheaval seen in the UK's decision to leave the European Union and the United States' endorsement of Donald Trump's pledges to withdraw from trade treaties in a bid to put "America First," the IMF said the economic response in both the UK and US had picked up.
"Growth picked up in the United States as firms grew more confident about future demand...Growth also remained solid in the United Kingdom, where spending proved resilient in the aftermath of the June 2016 referendum in favour of leaving the European Union (Brexit)," the IMF said.
Chancellor of the Exchequer Philip Hammond welcomed the report in the House of Commons.
The IMF said the US economy would grow half a percentage point faster than in 2017 and 2018 than it predicted in October 2016, before the election of President Trump. On Brexit, the IMF said the better than expected performance of the of the UK economy since the vote in June 2016 showed any negative effects would materialise gradually.
But it said the downsides of Brexit, once the terms of the UK's exit from the EU are known, could include consumers purchasing less because of the weaker pound, and in the long-term, barriers to trade, migration and a potential downsizing of London's prized financial sector.