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Global smartphone boom has peaked, International Monetary Fund says

Global smartphone boom has peaked, International Monetary Fund says”

The World Economic Outlook report released on Tuesday, said that India's growth projections of 7.4 percent for this year and 7.8 percent for next year remained unchanged from the earlier estimates.

In general, economy of the CIS member countries will grow 2.2 percent in 2018 and 2.1 percent in 2019, according to analysts of the fund.

The IMF predicts the world's second-largest economy, China, will expand at a 6.6 percent rate this year and 6.4 percent in 2019. "The global economic upswing that began around mid-2016 has become broader and stronger", Maurice Obstfeld says in the introduction to the spring edition of the World Economic Outlook (WEO). Japanese economic growth is forecast to decelerate to 1.2 percent from 1.7 percent in 2017.

"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. The choices governments, central banks, and regulators make now will determine how long this moment lasts. The IMF says further cuts in interest rates are needed to bring price rises back towards that rate.

In the United States, the Trump tax reform will also weigh on the economy after 2020, as it phases out full expensing for investment.

Assets tied to cryptocurrencies don't pose an immediate danger to the global financial system because their footprint is still small, and they have limited links to the rest of the financial system, although they have the potential to magnify the risks and increase the transmission of economic shocks, according to IMF's preliminary assessment.

Obstfeld said there was more of a "phoney war" between the United States and China than a return to the widespread use of tariffs in the Great Depression, but that there were signs that even the threat of protectionism was already harming growth.

The global lender released its World Economic Outlook report in Washington DC on Tuesday, ahead of the IMF/World Bank Group Spring Meetings.

In the developed economies, he says, ageing populations and low growth in productivity (the amount each worker produces) mean they are unlikely to achieve the per capita growth rates they managed before the crisis - and it is per capita growth that drives average living standards. One third of that uplift in USA growth is attributed to the Trump tax reform.

However, Obstfeld warned the stimulus was "largely temporary". Stronger U.S. demand will benefit most of the rest of the world, assuming Trump doesn't start a trade war.

"Early recognition of non-performing assets, a reduction of forbearance, and gradually unwinding of the system of implicit guarantees to better align borrowing costs with risk-adjusted returns remain essential for improving credit allocation and containing the accumulation of vulnerabilities", the International Monetary Fund said.



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