Countries around the world are suffering the consequences of rising internal inequality and should seriously consider redistributing wealth through tax policies and transfers, the International Monetary Fund said on Wednesday.
In its report, the IMF said the decline in overall global inequality over the past 30 years resulting from globalization and technological progress masked deep issues within countries, some caused by the same factors.
While China's growth rates for 2019 to 2022 have similarly been revised upward by 0.2 percentage point on average, the IMF urged the Chinese authorities to intensify their recent efforts to rein in credit expansion and strengthen financial resilience.
The IMF's message would appear to put it at odds with the Trump administration, whose new tax proposals rely heavily on cuts for companies and the wealthy.
IMF also expects the Indian economy to grow 8 per cent in the medium term on the back of reforms undertaken so far.
The upward revision to the 2018 forecast mainly reflects an expectation that "authorities will maintain a sufficiently expansionary policy mix" to meet their target of doubling real gross domestic product (GDP) between 2010 and 2020, according to the IMF.
"It is important to emphasize that inequality has increased in the largest countries in the world: China, India and the United States", said the director of the IMF's fiscal affairs department, Vitor Gaspar.
The IMF pointed to extremely progressive tax systems, like the rates of "nearly 100 percent in Sweden or the United Kingdom in the 1970s", as a possible ally to curtailing further inequality, as it ranked the UK's current tax system as fairly middle of the road when it came to the tax systems of other advanced economies.