(Photo: rte.ie)

The global economy is now expected to grow 3.9% this year and next, two-tenths higher than predicted in October.

However, in an update of its World Economic Outlook, the IMF added that US growth will likely start to weaken after 2022 as temporary spending incentives brought about by the tax cuts begin to expire. The tax cuts will likely widen the current US deficit, strengthen the US dollar, and affect international investment flows, said IMF chief economist Maurice Obstfeld.

The IMF said global economies are recovering simultaneously and at a stronger pace, and will get at least a short-term boost from the US tax cuts. Nearly all the forecasts for 2018 and 2019 were revised upward compared to the previous estimate. However, the IMF warns that exuberant financial markets could be due for a reversal.