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Global growth expected to increase in ''14 - IMF report

January 22, 2014

| WASHINGTON , Jan 21 (KUNA) -- Global growth is expected to increase in 2014 after it was stuck in low gear in 2013, according to the International Monetary Fund's latest World Economic Outlook (WEO) Update. The Fund's chief economist and director of its Research Department Olivier Blanchard said Tuesday that global growth should average 3.7 percent in 2014. He affirmed that "the basic reason behind the stronger recovery is that the brakes to the recovery are progressively being loosened. "The drag from fiscal consolidation is diminishing. The financial system is slowly healing," he noted. The WEO indicated that global activity strengthened during the second half of 2013, as anticipated in the October 2013 World Economic Outlook (WEO). Activity is expected to improve further in 2014-15, "largely on account of recovery in the advanced economies." Global growth is now projected to be slightly higher in 2014, at around 3.7 percent, rising to 3.9 percent in 2015, a broadly unchanged outlook from the October 2013 WEO. It indicated that "downward revisions to growth forecasts in some economies highlight continued fragilities, and downside risks remain." In advanced economies, "output gaps generally remain large and, given the risks, the monetary policy stance should stay accommodative while fiscal consolidation continues." In many emerging market and developing economies, "stronger external demand from advanced economies will lift growth, although domestic weaknesses remain a concern. Some economies may have room for monetary policy support." In many others, output is "close to potential, suggesting that growth declines partly reflect structural factors or a cyclical cooling and that the main policy approach for raising growth must be to push ahead with structural reform." In some economies, "there is a need to manage vulnerabilities associated with weakening credit quality and larger capital outflows." As for projections, the WEO showed that growth in the US is expected to be 2.8 percent in 2014, up from 1.9 percent in 2013. Growth is projected at three percent for 2015. In the euro area, growth is projected to strengthen to one percent in 2014 and 1.4 percent in 2015, but the recovery will be "uneven." The pickup will generally be more "modest in economies under stress, despite some upward revisions including Spain." Elsewhere in Europe , activity in the UK has been "buoyed by easier credit conditions and increased confidence." Growth is expected to reach 2.4 2014 and 2.2 in 2015, but economic slack will remain high. Growth in emerging market and developing economies is expected to increase to 5.1 percent in 2014 and to 5.4 percent in 2015. Growth in China rebounded strongly in the second half of 2013, due largely to an "acceleration" in investment. This surge is expected to be "temporary, in part because of policy measures aimed at slowing credit growth and raising the cost of capital." Growth is thus expected to moderate slightly to 7.5 percent in 2014 and 7.3 percent in 2015. Downward revisions to growth in 2014 in the Middle East and North Africa region, and upward revisions in 2015, mainly reflect expectations that the rebound in oil output in Libya after outages in 2013 will proceed at a slower pace. Projections for the Middle East , North Africa , Afghanistan , and Pakistan are 3.3 percent in 2014 and 4.8 percent in 2015. Meanwhile, strengthening global growth does not mean that the global economy is "out of the woods." The WEO Update emphasizes that "ensuring robust growth and managing vulnerabilities remain policy priorities for all countries. " (end) si.bs KUNA 212210 Jan 14NNNN All KUNA right are reserved


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Source: Kuwait News Agency


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