International Monetary Fund projects global economy to grow at 3.6% this year

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"In many advanced economies, steady progress toward central bank inflation targets has been elusive, reflecting in part the slow reduction of spare capacity in labor markets", the International Monetary Fund said. Eurosceptics have called for Mr Hammond to be sacked, believing that his pressing for a long post-Brexit transition period from European Union membership amounts to effective resistance to leaving the bloc. "Over a longer horizon, U.S. growth is expected to moderate".

'A firm judgment on assets being overpriced - I don't think we're ready to make.

"Overall, the Build, Build, Build program should be implemented with a view to boosting growth while keeping the current account and fiscal deficits at moderate levels", it said.

The cut from the earlier forecast of 7.2 per cent was the sharpest among the multilateral agencies.

Germany and Spain received predictions of 2.0pc and 3.1pc growth respectively, with France lower at 1.6pc, rising to 1.8pc in 2018.

There are a small number of downgrades as well, however, and they are substantial in the case of India, because of the lingering effects of a currency exchange a year ago and uncertainty associated with a new tax.

The IMF on Tuesday raised its 2017 economic forecast for the United States but said the coming years would likely see sluggish gains in the absence of more growth-oriented policy from Washington.

And both an aging work force and weak productivity growth will likely hold USA economic growth potential around 1.8 percent, according to the report.

The World Bank's growth projection made in June was 7.2% for this year and 7.5% next year. Treasury officials have already said Mr Hammond is facing "a bloodbath" in the public finances in his Budget next month, as weak economic forecasts derail the government's plans.

"While most of the world is sharing in the current upswing, emerging market and low-income commodity exporters, especially energy exporters, continue to face challenges, as do several countries experiencing civil or political unrest, mostly in the Middle East, North and sub-Saharan Africa, and Latin America", said Obstfeld.

But the United Kingdom has seen higher consumer prices as a result of the depreciation in sterling following last year's European Union referendum.

At the same time, the International Monetary Fund said the cyclical pickup in global economic activity provides "an ideal window of opportunity" for countries to undertake reforms aimed at boosting productivity and building resilience against downside risks.

Since the float, Egypt's central bank has raised key interest rates by a total of 700 basis points.