The raise of the global growth forecast is due, partly, to the cuts in USA taxes, which will propel the growth of the U.S. economy to 2.7 percent, with 0.4 more than it was expected by the International Monetary Fund, making it the biggest growth out of all advanced economies.
The risks to the global growth forecast seems to be broadly balanced in the near term, although it remain skewed to the downside over the medium term.
The fund said it expected South Africa's economy to grow by 0.9% this year, down from an earlier projection of 1.1% given in October. The revision reflects increased global growth momentum and the expected impact of the recently approved USA tax policy changes.
"As the year 2018 begins, the world economy is gathering speed".
"This is good news". Consistent with these plans, the country's ongoing and necessary rebalancing process implies lower future growth, Obstfeld said at a news conference in Davos.
"The primary sources of [global] GDP acceleration so far have been in Europe and Asia, with improved performance also in the United States, Canada, and some large emerging markets, notably Brazil and Russian Federation, both of which shrank in 2016, and Turkey", Obstfeld said.
Much of this momentum will carry through into the near term.
Advanced economies are seeing solid simultaneous growth, and the U.S. tax reform passed just before Christmas will have a measurable effect, at least for a couple of years.
The IMF cited increased investment as businesses take advantage of lower corporate tax rates as it projected US growth to increase to 2.7 per cent this year, from 2.3 per cent in 2017.
The corporate tax cuts are seen driving investment, which could add growth of 1.2 percent to the United States economy through 2020, while also contributing to the faster expansion in U.S. trading partners like Mexico.
"Even as economies return to full employment, inflation pressures remain contained and nominal wage growth is subdued". Forecasts for emerging and developing economies were unchanged.
In its WEO update, the International Monetary Fund said the cyclical upswing underway since mid-2016 has continued to strengthen.
It estimates the effect on USA growth of the tax cuts will be positive through 2020, accumulating to 1.2% through that year, with a range of uncertainty around its central scenario.
But it has warned that extreme weather events - such as droughts in Australia, and hurricanes in the Atlantic - pose a significant risk to its positive forecasts, saying "recurrent, potent climate events" impose "devastating humanitarian costs and economic losses" on affected regions. High-frequency hard data and sentiment indicators point to a continuation of strong momentum in the fourth quarter. World trade is expanding, and consumers are more confident.
"Global economic activity continues to firm up".