Europe is once again at the back of the class with the dunce’s cap on in the latest IMF World Economic report.
It says the developed world is starting to look healthier and America’s growth will bounce in 2014 as will Japan’s before cooling off, but the eurozone will crawl along.
This year the eurozone has been stuck in the red thanks to its austerity-first policies to pay off debt, while China has forged ahead, Japan has a super-stimulus beefing up its figures, and American growth has returned. Europe will shrink in 2013.
But next year should see the eurozone return to growth. By then America will have nearly doubled its annual growth rate, while China will struggle in 2014 to maintain growth at this year’s levels.
The IMF’s Chief Economist Olivier Blanchard said: “The recovery from the crisis continues. I think that’s a fact and an important one. But too slowly. And advanced economies are not out of the woods.Public debt, and in some cases, private debt, remain very high. And fiscal sustainability is not a given.Unemployment remains very high and will remain high for a very long time. So these challenges remain and I think they will be the major challenges we face in the years to come”
Overall the IMF sees global growth down in 2014, as it has done in the last 18 months, due to a slowdown in Asia, where cyclical peaks have been passed and structural barriers to growth remain unreformed.
America is once again in the global economic driving seat, but its politicians could derail that if the current budget standoff becomes prolonged. Other slowing factors include an eventual ending of the 85 billion dollar a month printing spree at the US mint, and Chinese growth staying in single rather than double figures.