The International Monetary Fund (IMF) on Tuesday raised its global growth forecast for 2017 and 2018 due to a broad-based recovery in Europe, China, Japan and the United States.
In its latest World Economic Outlook, the IMF forecast that the global economy will grow by 3.6 percent in 2017 and 3.7 percent in 2018, both 0.1 percentage point higher than its previous forecast in July.
"The global recovery is continuing, and at a faster pace... we see an accelerating cyclical upswing boosting Europe, China, Japan, and the United States, as well as emerging Asia," said IMF chief economist Maurice Obstfeld.
The IMF expects the Chinese economy to grow 6.8 percent this year and 6.5 percent next year, both 0.1 percentage point higher than its previous forecast in July.
The fund also revised up its U.S. growth forecast to 2.2 percent in 2017 and 2.3 percent in 2018, 0.1 and 0.2 percentage point, respectively, higher than its projection in July.
The euro area recovery is expected to gather strength this year, with growth projected to rise to 2.1 percent in 2017 before moderating to 1.9 percent in 2018, according to the IMF. The forecast for 2017 and 2018 are both 0.2 percentage point higher than the projection in July.
Growth projection for Japan was revised to 1.5 percent in 2017 and 0.7 percent in 2018, up 0.2 and 0.1 percentage point, respectively, from the forecast in July.
While short-term global growth "could increase further" due to stronger confidence and favorable market conditions, the IMF also warned of the downside risks facing the global economy over the medium term, including persistently low inflation in advanced economies, financial stability risks in emerging markets, geopolitical tensions and protectionist pressures.
"Although the chances of advanced economy policies turning inward appear to have diminished in the near term, pressures for increased protectionism have not disappeared and ought to be resisted," the IMF said.
The fund also called on policymakers to seize the opportunity to push for critical reforms, as research showed that structural reforms are easier to implement when the economy is strong.
"The welcome cyclical upturn after disappointing growth over the past few years provides an ideal window of opportunity to undertake critical reforms, thereby staving off downside risks and raising potential output and standards of living more broadly," said the IMF.