The International Monetary Fund said the U.S. would grow faster than expected thanks to President-elect Donald Trump’s plans to cut taxes and increase spending on infrastructure.
The IMF on Monday boosted its economic growth forecasts for the U.S., saying the nation’s output could grow a half-percent faster than originally predicted over this year and next, Fox Business reported.
The agency said gross domestic product will go up to 2.3 percent in 2017, and to 2.5 percent in 2018, Reuters reported.
“We think the prospects of a more expansionary fiscal stance coupled with tax reform justifies some upgrade of the U.S. forecast,” said Maurice Obstfeld, the IMF’s chief economist and a former adviser to President Obama.
Trump has promised to cut tax rates and make multinational corporations bring their untaxed earnings back to the U.S. instead of keeping them in other countries. He also plans to increase spending on infrastructure through a major infrastructure spending package.
The IMF also warned that Trump’s tax and spending policies could cause inflation, and said his punitive tariffs on other countries and backing out of trade deals could pose a threat to growth, the Washington Examiner reported.
“We see a wider dispersion of risks to this short-term forecast, with those risks still tilted to the downside,” Obstfeld said.