The International Monetary Fund has lifted its forecasts for world economic growth, but warned the recovery is still weak and uneven.
In an update to its World Economic Outlook (WEO) the IMF predicted 3.7 percent global economic growth this year, 0.1 percentage point higher than its October projections, and sees growth of 3.9 percent in 2015.
The IMF’s chief economist Olivier Blanchard said it is stronger in the US than in Europe and while the eurozone is turning the corner from recession to recovery Southern Europe continues to be “the more worrisome part of the world economy”.
For the euro area the WEO sees 1.0 percent growth this year, rising to 1.4 percent in 2015. The United States is set for 2.8 percent expansion this year and only slightly higher at 3.0 percent in 2015.
Japan is forecast to grow 1.7 percent this year, but only 1.0 percent in 2015. Tokyo launched an ambitious economic programme last year to shock the economy of out of nearly two decades of deflation.
Among the largest emerging economies, the Fund forecast that China will grow 7.5 percent this year, India 5.4 percent, Russia 2.0 percent and Brazil 2.3 percent.
Overall its outlook was unchanged for the developing world on the basis that higher exports to rich nations would be offset by weak demand at home.
The IMF urged central banks to avoid raising interest rates too soon while growth remains fragile, and called on the European Central Bank in particular to help sluggish demand by boosting credit growth.
In Europe, Britain is the star of the revised World Economic Outlook; its upgrade for 2014 – to 2.4 percent – is stronger than any other country.
Amid cheap credit and greater confidence, its forecast for UK growth was raised from 1.9 percent in October.
Around the eurozone only Spain was given a significant upgrade from the previous growth estimate last October. Its GDP is expected to rise by 0.6 percent in 2014 and 0.8 percent next year.
Germany – the largest eurozone economy – is forecast to expand by 1.6 percent this year and 1.4 percent in 2015.
For France the growth prediction is just 0.9 percent in 2014 due to policy uncertainty. That is supposed to rise to 1.5 percent in 2015.
Very low inflation in the eurozone was flagged up as a risk to economic activity, and the IMF voiced concern about as rich nations growing below their full capacity leading to the kind of problems that Japan has struggled with for 20 years.
A falling spiral of prices would weaken demand by making cash more valuable over time, discouraging consumption. It also increases the value of debt, a big problem for highly indebted places like the United States and the eurozone.
“The lower the inflation rate, and … the larger the deflation rate, the more dangerous it is for the euro recovery,” IMF chief economist Olivier Blanchard said.
Europe, the US and Japan are all wrestling with uncomfortably low inflation, along with persistently high unemployment, which has forced their central banks to continue strong stimulus programmes.
Blanchard said unemployment “remains much too high” in most advanced economies.
Copyright © 2014 euronewsMore about:
- 1Hungary gets a bitcoin cash machine as the virtual currency craze reaches Budapest
- 2Ukraine related sanctions affect farmers, shoppers, tourists and burger eaters
- 3Stronger dollar pushes euro’s value down, eurozone business growth slows
- 4European farmers protest over lost revenue from Russia sanctions retaliation
- 5Scottish independence vote raises questions for whisky producers
- 1#ن: How an Arabic letter was reclaimed to support Iraq’s persecuted Christians | euronews, world news
- 2Ellen MacArthur: making waves on a journey to a circular economy | euronews, the global conversation
- 3China executes eight Muslims convicted of terrorism | euronews, world news
- 4Putin T-Shirts flying off the shelves at Moscow megastore | euronews, world news
- 5Everything you need to know about the Ebola virus | euronews, world news
- 6Hoverbike on the horizon | euronews, hi-tech
- 7Ukraine accuses Russian aid convoy of stealing factory equipment | euronews, world news
- 8Massive Swedish forest fire is declared a national emergency | euronews, world news
- 9Risk of fresh ash cloud threatens European air travel | euronews, world news
- 10Man, 27, fails in suicide bid after tigers reject chance to eat him | euronews, world news
- 11Iceland warns Europe’s airlines of possible volcanic eruption | euronews, world news
- 12Beyond the subconscious | euronews, futuris
- 13Bardarbunga volcano in Iceland continues to rumble | euronews, world news
- 14Poland wants compensation from the EU for Russian import ban | euronews, world news
- 15EU’s Russia sanctions doing more harm than good says Hungary’s PM Orban | euronews, world news
- 16Romania buys into bitcoin big time | euronews, corporate
- 17Greek farmers suffer in economic war between Russia and EU | euronews, economy
- 18Turkey’s women have the last laugh | euronews, world news
- 19Hamas executes 18 suspected collaborators | euronews, world news
- 20Turkish ferry makes high-speed final landing | euronews, no comment
Wires > Business
- 13:36 CET McDonald’s says 12 Russian branches temporarily closed
- 13:23 CET Tesco slashes profit forecast and dividend as trading slumps
- 13:23 CET Barclays complaints fall by a quarter in first half of 2014
- 13:19 CET Italy’s triple-dip recession confirmed, deflation looms
- 13:08 CET Disappearing euro zone inflation set to heighten ECB concerns
- 13:00 CET FTSE edges higher, stronger drugmakers outpace weak retailers
- 12:28 CET Big-spending Britons drive economy, but housing picture mixed
- 12:24 CET UK banks forced to re-open 2.5 million insurance mis-selling cases