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The IMF raises forecasts for global growth as advanced economies strengthen

January 21, 2014

The International Monetary Fund (IMF) raised its global growth forecasts for 2014, citing the expansion in advanced nations such as the U.S. and the U.K. , and demanded these economies to continue accommodative policies to sustain this strength. The global economy is forecast to grow by 3.7 percent this year, up from October's estimate of 3.6 percent, according to the IMF in its World Economic Outlook released in Washington Tuesday. "In advanced economies, output gaps generally remain large and, given the risks, the monetary policy stance should stay accommodative while fiscal consolidation continues," the Washington -based organization said in the report. "In many emerging market and developing economies, stronger external demand from advanced economies will lift growth, although domestic weaknesses remain a concern." The U.S. economy will grow 2.8 percent, compared with 2.6 percent. The Japanese economy will grow 1.7 percent versus 1.2 percent. The U.K. economy will grow 2.4 percent, compared with 1.9 percent in the last revision. China , the world's second-largest economy, is projected to grow 7.5 percent, faster than the 7.3 percent seen in October, after 7.7 percent last year, according to the report. Olivier Blanchard , the IMF's chief economist, said in a statement that the IMF expects the Fed's benchmark interest rate will rise in 2015. Among the new risks to advanced economies, the IMF cited "very low inflation," particularly in the euro area, as becoming more significant and raising the prospect those longer-term inflation expectations could head lower.

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Source: Financial Markets

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