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World recovery picking up pace, says IMF

January 22, 2014

Katie Allen

The global economic recovery will pick up pace this year but remains "weak and uneven", the International Monetary Fund's top economist has said. Olivier Blanchard said that the "largely anticipated" recovery in global growth would see it pick up to 3.7% in 2014 from 3% last year but there was still much work to be done as new risks emerged. The confirmed 2.4% growth forecast for the UK was well ahead of Europe's largest economy, Germany , where growth is forecast at 1.6%. France's economy would grow by 0.9% given "policy uncertainty is weighing on growth", Blanchard said. The forecast for global growth was barely changed from 3.6% pencilled in last October when the IMF published its closely watched World Economic Outlook. "The brakes to the recovery are progressively being loosened. The drag from fiscal consolidation is diminishing. The financial system is slowly healing. Uncertainty is decreasing," said Blanchard, unveiling the latest update to the WEO forecasts. The Washington -based fund also stuck by its view that growth in advanced economies would accelerate markedly this year, to 2.2% from 1.3% in 2013. Growth in emerging market and developing economies will edge up to 5.1% from 4.7% in 2013, Blanchard said. He highlighted risks from deflation in the eurozone and the unwinding of years of ultra-loose monetary policy and stressed the recovery was fragile. "Among advanced economies, it is stronger in the US than in Europe , stronger in the euro core than in southern Europe . In most advanced economies, unemployment remains much too high. And downside risks remain," Blanchard said. Blanchard's summary of conditions around the world highlighted rebalancing challenges for Japan , big concerns about southern Europe and threats to emerging markets from changing monetary policy. Prospects for the world's largest economy, the US, were improving. "US growth appears increasingly solid. Private demand is strong. As a result of the December budget agreement, fiscal consolidation, which weighed on growth in 2013, will be more limited in 2014. "These factors lead us to forecast 2.8% growth for 2014, compared to 1.9% in 2013," he said.

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Source: Guardian (UK)

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