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IMF Raises Global Outlook to 3.7%

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IMF Raises Global Outlook to 3.7%

The International Monetary Fund raised its growth outlook on the global economy, citing accelerated growth among advanced industrialized economies.

The global economy will expand 3.7 percent in 2014, up from an earlier estimate of 3.6 percent, the IMF said in a revised World Economic Outlook report. Advanced economies will pick up the slack in 2014, led by the United States, United Kingdom and Japan. The IMF’s forecast for 2015 is 3.9 percent, unchanged from the previous estimate.

The US economy will grow 2.8 percent in 2014, compared with the October estimate of 2.6 percent. UK GDP will expand 2.4 percent this year, up from an initial estimate of 1.9 percent. Meanwhile, economic growth in Japan was revised from 1.2 percent to 1.7 percent, the report showed. If the revised estimate holds, the global economy will experience its best year since 2011, when the world’s gross domestic product rose nearly 4 percent.

The revised outlook doesn’t come without caveats. The pace of economic expansion will remain uneven, as emerging markets continue to struggle with domestic weaknesses. At the same time, deflation remains a real threat across several advanced economies, which are struggling with stubbornly low inflation levels. Weak inflation threatens to dampen consumption and make existing debts harder to pay.

“In advanced economies, output gaps generally remain large, and given the risks, the monetary policy stance should stay accommodative while fiscal consolidation continues,” the IMF said in its report.

Strong external demand from advanced economies is expected to boost emerging markets, the report said. China’s economy is forecasted to grow 7.5 percent this year, up from an initial estimate of 7.3 percent. The biggest negative adjustment came for Russia. The IMF now believes Russia’s GDP will expand 2 percent this year and 2.5 percent in 2015. Both of the revised predictions are 1 percentage point lower than the October forecast.

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