Global growth will strengthen gradually in 2013 to reach 3.5 percent in 2013, from 3.2 percent in 2012, as the downside risks on economic activity start to ease this year, says the International Monetary Fund (IMF) in an update to its World Economic Outlook (WEO). But the recovery is slow, and the report stressed that policies must address downside risks to bolster growth.
The IMF in its update revised downward global growth projections by just 0.1 percentage point compared with the October 2012 WEO, as it noted the lowered acute crisis risks in the euro area and the United States, and a modest growth pickup in some emerging market and developing economies.
Emerging markets, developing countries, and the U.S. are seen as the main sources of growth this year. The IMF forecasts growth of 2 percent in the United States. Emerging market and developing economies are expected to grow by 5.5 percent this year. These figures are broadly unchanged from the October 2012 WEO.
The IMF downgraded its near-term forecast for the euro area, with the region now expected to contract slightly in 2013. The report observed that even though the risks have gone down and financial conditions in the periphery economies have improved, those have not yet translated into improved borrowing conditions for the private sector. Continuing uncertainty about the ultimate resolution of the global financial crisis could also dampen the region’s prospects.
Photo: 401(K) 2013