Despite the IMF's optimism, these are risky economic times

CHINA-ECONOMY-IMF

According to the IMF's World Economic Outlook (WEO), the country's economic growth is expected to be 7.8 per cent in 2019.

The upgrade to global growth for this year to 3.9% potentially makes 2018 the strongest year since 2011, when the economy was rebounding from the financial crisis.

The Trump administration has maintained that Republican tax cuts passed last year would allow the United States to maintain sustained gross domestic product growth above 3 percent for years and defy forecasts that us budget deficits will balloon over the coming decade.

"That major economies are flirting with trade war at a time widespread economic expansion may seem paradoxical - especially when the expansion is so reliant on investment and trade", he said.

In emerging market and developing economies, in contrast, growth will remain close to its 2018-19 level as the gradual recovery in commodity exporters and a projected increase in India's growth provide some offset to China's gradual slowdown and emerging Europe's return to its lower-trend growth rate, it said. Figures disclosed past year that some €119 million in Apple's global sales are put through its Irish operations.

The IMF has bailed out scores of countries over the years, including the United Kingdom in 1976 when the minority Labour government borrowed £2.3bn from the fund to stabilise the value of the pound; Iceland in 2008; and Greece in 2010, 2012 and 2015.

"However, recapitalisation should be part of a broader package of financial reforms to improve the governance of public sector banks, and banks' debt recovery mechanisms should be further enhanced", the International Monetary Fund said.

Obstfeld doesn't have much to say about Canada in his report; he concentrates on the bigger, systemically important economies.

However, he said these trends were more due to technological change than to trade, and that the recent tariffs and bilateral trade negotiations announced by the U.S. would do little to help the multilateral or overall United States external account deficit.

International Monetary Fund economist Dirk Muir said the New Zealand government is also weighing up where there has been underinvestment in infrastructure and that there are ways around that, such as shifting spending into public transport to address a problem like traffic congestion, as opposed to building a new road. One third of that uplift in USA growth is attributed to the Trump tax reform. In March, Nigeria announced it would not be a part of that continental trade deal, which seeks to remove barriers and create free movement of goods and services across Africa. Stronger U.S. demand will benefit most of the rest of the world, assuming Trump doesn't start a trade war.

However, Obstfeld warned the stimulus was "largely temporary".

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