The unexpectedly stubborn recession in the eurozone, and weakness in Japan, will hold down global economic growth this year according to the International Monetary Funds’ latest forecast.
It believes growth this year for the entire world will be 3.5 percent – slightly less than its last projection back in October.
But it does still see a rebound next year to 4.1 percent expansion – if recovery takes a firm hold in the eurozone.
This year the US is set to grow 2.0 percent, Japan 1.2 percent, Britain 1.0 percent and the eurozone economy will shrink by 0.2 percent, having contracted by 0.4 percent in 2102.
The IMF’s chief economist Olivier Blanchard said some cautious optimism may be justified. He noted that policy actions in Europe had helped calm the region’s debt crisis.
But he also warned major risks remain, including the possibility of the eurozone’s crisis flaring up again.
The currency bloc was told it risks prolonged stagnation if it fails to complete the fiscal and banking reforms currently underway.