The United States is likely to be one of the bright spots
The International Monetary Fund (IMF) is slightly more optimistic about the global and U.S. economies this year than it was three months ago.
In an updated outlook released on Tuesday, the global lending organisation forecasts that the world economy will grow 3.7 per cent in 2014, and that the U.S. economy will grow 2.8 per cent. The global forecast is 0.1 percentage point higher and the U.S. forecast 0.2 point higher than the IMF’s October forecast.
After a sluggish start, global economic growth picked up in the second half of 2013. As a result, growth amounted to 3 per cent last year. The IMF expects it will be even stronger growth this year.
The IMF forecasts that the U.S. economy grew 1.9 per cent last year. And its 2.8 per cent forecast for this year would match U.S. growth in 2012. Part of the anticipated improvement is based on expectations for less drag from higher U.S. taxes and across-the-board spending cuts.
By 2015, the IMF forecast the U.S. economy will grow 3 per cent, or 0.4 percentage point lower than its October forecast.
The IMF reduced its outlook because a recent budget agreement left in place most of the spending cuts.
The IMF had expected most of those cuts to have been eliminated by next year.
For countries in Europe using the common euro currency the IMF forecast stronger growth. The region is emerging from recession after a lingering debt crisis.
Economic activity shrank 0.7 per cent in 2012 and 0.4 per cent in 2013. But this year, the IMF projects 1 per cent growth and 1.4 per cent in 2015.