"In advanced economies, monetary policy settings should remain accommodative until there are firm signs of inflation returning to targets...(as) still-subdued wage pressures mostly reflect remaining slack, not fully captured by headline unemployment rates", the Fund said.
"Growth is expected to soften temporarily to 2.2 per cent in Australia, where housing investment and mining exports in the first half of the year were undermined by bad weather", the report says.
By Lalit K Jha Washington, Oct 10 (PTI) The IMF today said the global economic recovery is continuing at a faster pace as it upgraded its growth projection to 3.6 per cent for this year, citing an upswing in countries like China, Japan, Russia, and some emerging economies in Europe.
The IMF's previous projections for 2017 made in April and July had put India's economic growth rate at 7.2 percent.
"Japan should withdraw fiscal support very gradually, including through a gradual increase in the consumption tax rate over several years", the International Monetary Fund report said.
The Fund cautioned that euro zone growth would remain under pressure due to weak productivity, an ageing population and, in some countries, high debt.
Finance ministers and central bankers from the IMF's 189 member nations will be heartened by the brighter global outlook as they meet this week in Washington for the fund's annual meetings.
"Only a year-and-a-half ago, the world economy faced stalling growth and financial market turbulence".
South Africa's Treasury said in February it expected the economy to grow 1.3 percent in 2017, but Finance Minister Malusi Gigaba is due to announce revised projections on October 25 when he presents his medium term budget policy statement to parliament.
But Lagarde warned that a strengthening recovery may be masking more troubling trends, such as an increase in political polarization brought about by inequality.
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GDP in the west African powerhouse Nigeria contracted by 1.6 percent in 2016, but is predicted to grow by 0.8 percent this year and 1.9 percent next year.
Strong global demand has also been a boon for the rest of Asia, where the fund forecasts sustained growth.
Even the outlook for advanced economies has been raised 0.2 percentage points higher than an earlier projection in July, to 2.2 percent, moving up the world's outlook from 3.5 percent to 3.6 percent.
Growth in Japan is being driven by global demand and policies created to keep fiscal policy supportive.
At the same time, the pace of recovery in eurozone nations has finally picked up though the United Kingdom is still predicted by the International Monetary Fund to grow at a stronger pace this year than France (1.6%), Italy (1.5%) - as well as Japan (1.5%).
If realised, the growth rate will outdo last year's 6.7 per cent, which was China's slowest pace of expansion since 1990.
The IMF is encouraging countries to take advantage of the benign climate to boost the growth potential of their economies and cushion the impact of the next downturn.
"Policy makers should act while the window of opportunity is open", according to Obstfeld.