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US to Drive Global Growth in 2014-15: IMF

H.S. Borji
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US to Drive Global Growth in 2014-15: IMF

A stronger US economy will drive global recovery this year and next, and ensure the global economy withstands volatility in emerging markets, the International Monetary Fund reported today.

The US economy will expand 2.8 percent this year and 3 percent in 2015, unchanged from the January estimate, the IMF’s World Economic Outlook showed today. The US will anchor the global economy, which is expected to grow 3.6 percent this year and 3.9 percent in 2015.

The revised forecast was based on the assumption the Federal Reserve will end its record bond buying program later this year, paving the way for the first rate hike in the third quarter of 2015.

A stronger US economy will counterbalance nascent growth in emerging markets. Russia’s growth forecast was cut from 2 percent to 1.3 percent in 2014, as the escalating crisis in the Ukraine is expected to worsen an already weak Russian economy. Brazil’s outlook was reduced from 2.3 percent to 1.8 percent, while South Africa was cut from 2.8 percent to 2.3 percent.

Among the G7 economies, the United Kingdom and Canada will join the US among the top performers. The UK economy is expected to grow 2.9 percent this year, despite concern the UK still relies too much on easy credit. The IMF said Canada’s economy will grow 2.3 percent in 2014.

The IMF upgraded the Eurozone outlook from 1 percent to 1.2 percent. Germany’s economy is expected to advance 1.7 percent, while growth in France is forecast to reach 1 percent.

In Japan, an increase in the consumption tax will likely dampen growth. The IMF revised Japan’s growth outlook from 1.7 percent to 1.4 percent.

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