Emerging economies are predicted to drive three-quarters of this global growth on the back of rising commodity prices, while advanced economies are seeing an increase in manufacturing, according to the latest World Economic Outlook, titled 'Gaining Momentum?' The report was released on Tuesday at the start of the World Bank-IMF Spring Meetings in Washington, D.C.
Economies in the developing world continue to provide most of the impetus to global growth, led by China and India.
Recent fiscal policy reforms improve Sri Lanka's economic outlook - World Bank Mon, Apr 17, 2017, 11:38 pm SL Time, ColomboPage News Desk, Sri Lanka.
The IMF, a global organisation focused on economic stability, said the UK's economy will grow by 2% in 2017 and by 1.5% in the following year.
France should expand further next year, to 1.6 percent.
One bright spot however is gas-rich Qatar which is expected to register 3.4-percent growth this year, compared with 2.7 percent in 2016.
But there were a couple of upside surprises among the advanced economies, including a half-point upward revision to the forecast for Britain this year, to two percent, despite fears of a negative impact of Brexit. Europe and Japan have also been upgraded due to a recovery in global manufacturing and trade.
The International Monetary Fund (IMF) has said the overall fiscal deficit to Gross Domestic Product (GDP) in 2016/17 is projected to be below the targeted figure by nearly half.
"Moreover, while there is a chance growth will exceed expectations in the near term, significant downside risks continue to cloud the medium-term outlook, and indeed may have intensified since our last forecast".
However, Obstfeld noted, a quick recovery in the USA could mean faster interest rate hikes and rises for the U.S. dollar, putting other economies with a United States dollar-dependent exchange rate or hefty dollar-denominated debts under pressure.
"The modest recovery is projected to be supported by a mildly expansionary fiscal stance, accommodative financial conditions, a weaker euro, and beneficial spillovers from a likely U.S. fiscal stimulus".
"Downside risks stem from several potential factors", The Fund said, including, "an inward shift in policies, including toward protectionism, with lower global growth caused by reduced trade and cross-border investment flows".
China faces a "daunting challenge of reducing its reliance on credit growth" and the consequences of failing to do so are serious, it added. Structural problems of low productivity growth and high income inequality still persist as a legacy of the financial crisis.
Britain's post-referendum economic prospects were given a new boost today when the International Monetary Fund gave the United Kingdom a bigger growth forecast upgrade than any other major country.
'Though highly uncertain, medium-term growth prospects have also diminished in the aftermath of the Brexit vote because of the expected increase in barriers to trade and migration, as well as a potential downsizing of the financial services sector amid possible barriers to cross-border financial activity, ' the International Monetary Fund added.