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Global economic growth will be at 3.7 per cent in 2014 and 3.9 per cent in 2015, the International Monetary Fund (IMF) said in its World Economic Outlook report.
The report cites improved statistics in world trade beginning in the final two quarters of 2013.
“In advanced economies, final demand has increased broadly as expected. In emerging markets, a rebound in exports was the main driver of better activity, while domestic demand generally remained subdued except in China,” an IMF summary of the report said.
The report expects that the increased activity and demand for goods in the world’s strongest economies will benefit emerging markets and carry into the next two years.
The highest project growth for 2014 are in Asia (6.7 per cent) and Sub-Saharan Africa (6.1 per cent). While China registered the greatest growth projection at 7.5 per cent, France has the lowest projected growth at 0.9 per cent.
The report says that Japan will undergo a deceleration in its growth potential.
It also warns that the US Federal Reserve should not quickly react to positive economic prospects by scaling back its stimulus programme.
The IMF report forecasts that the US economy in 2014 will grow at 2.8 per cent, up from 1.9 the previous year and 0.2 per cent higher than initial estimates; it will reach at least 3.0 per cent in 2015.
In December, the Federal Reserve scaled back its stimulus programme by $10 billion – to $75 billion – on news that GDP growth in the third quarter outpaced estimates and registered at 4.1 per cent.
Duing the last few weeks of the third and fourth quarters, stronger retail sales and consumer purchases, added to the highest home construction rate in five years, boosted performance on Wall Street.
The unemployment rate – at its lowest since 2008 – in addition to data pointing to the highest consumer confidence level since the October Federal Shutdown, indicated that the economy may be wobbling it’s way firmly out of recession and into more stable recovery.
But growth in the 17-nation eurozone, the report says, is less dynamic.
While there has been positive momentum, the eurozone will grow at just 1 per cent next year, up from -0.4 per cent in 2013.
European economic experts have blamed high unemployment rates in many of the eurozone countries for the sluggish growth rate.
Analysts have also blamed slower than expected economic growth in emerging markets for the eurozone’s poor performance.
Nevertheless, the IMF believes that Europe will in 2014 begin to reverse negative growth figures, and “is turning the corner from recession to recovery”.
Germany will grow at 1.6 per cent in 2014, but countries plagued by persistent unemployment – such as Italy, Greece, Portugal, Spain and Cyprus – will be unable to break above the 1.0 per cent growth threshold.