President-elect Trump's promised tax cuts and infrastructure spending will boost U.S. economic output growth in the next few years, the International Monetary Fund projected Monday in a new global economic outlook.
The agency said gross domestic product, adjusted for inflation, would rise to 2.3 percent this year and 2.5 percent in 2018, increasing growth by 0.5 percentage points altogether.
"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 bring back untaxed earnings that multinational corporations have deferred bringing back to the U.S., goals shared by the Republican leadership in Congress. He also has called for a major infrastructure spending program, although support for that among Republicans is less clear.
Officials at the Federal Reserve have built the possibility of a Trump fiscal stimulus into their forecasts, projecting in December that they would raise interest rates one extra time in 2017 as a result.
Yet other Trump priorities, such as imposing new punitive tariffs or backing out of trade deals, could pose a threat to growth, Obstfeld warned, calling trade disruptions an "important downside risk" to the group's forecasts.
"Longer term, we would have to worry about other fiscal repercussions, for example if federal deficits rise," he also said.