The International Monetary Fund on Monday revised its World Economic Outlook for 2018 and 2019 to forecast a boost in investment in the United States, Reuters reported. The organisation’s update follows President Donald Trump’s administration introduction of sweeping tax cuts in December. The IMF, however, warned that US growth would decline after 2022 when the incentives triggered by the tax cut would reduce.
The IMF retained its forecast for India’s growth rate at 7.4% of its Gross Domestic Product in 2018 and 7.8% in 2019. It projected China’s growth at 6.8% and 6.4% in the corresponding time-frame.
The forecast for the US
Tax cuts may widen the United States current account deficit, strengthen the dollar and impact international investment flows, Reuters quoted IMF chief economist Maurice Obstfeld as saying.
Among other things, Trump’s proposed law cut the corporate tax rate from 35% to 21% permanently, and to lower taxes for about 70% of the middle-class families until 2026. The tax reforms are said to be the most massive overhaul in at least three decades.
The IMF update was released on the sidelines of the World Economic Forum in Davos, Switzerland.