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“Global activity strengthened during the second half of 2013 and is expected to improve further in 2014-15,” the IMF said.
Although some economies appear to be moving away from recession and toward sustained growth, emerging market and developing economies were vulnerable, the WEO indicated, and must be ready to “weather market turmoil and reduce external vulnerabilities”.
Russia, for example, had its projected 2014 GDP growth revised down from 2 to 1.3 per cent in the wake of the geopolitical instability created by the Crimea crisis, the outflow of capital like most other emerging countries.
The IMF also cut GDP forecasts for Brazil – from 2.3 to 1.8 per cent in 2014 – and South Africa which lost 0.5 to 2.3 per cent economic growth in 2014.
But the IMF did raise the UK’s economic growth prospects to 2.5 and 2.9 per cent for 2014 and 2015, respectively.
“Growth has rebounded more strongly than anticipated in the United Kingdom on easier credit conditions and increased confidence,” the WEO report showed.
Although UK economic growth would outpace all other countries in the G7 in 2014, the IMF did warn that its recovery has been unbalanced, citing disappointing business investment and export data.
Other countries, like Israel, for example, will see growth jump from 3.2 to 3.4 per cent in 2015 as it begins to produce gas from offshore fields.
In the meantime, Olivier Blanchard, the IMF’s chief economist warned that income inequality stood in the way of sustainable growth.
He said that increased income inequality could become as much an obstacle as the recent financial crisis.
“Though inequality has always been perceived to be a central issue, until recently it was not believed to have major implications for macroeconomic developments. This belief is increasingly called into question. How inequality affects both the macro-economy and the design of macroeconomic policy will likely be increasingly important items on our agenda,” he said on Tuesday.