The growth patterns of the world's economies are changing, according findings from the International Monetary Fund.
The fund said the optimism over economic recovery is still not high because recovery is in low gear and its drivers are shifting.
IMF's latest World Economic Outlook (WEO) report said it expects gobal growth to average 2.9% this year. The forecast is lower than the 3.2% recorded in 2012. But it is expected to rise to 3.6% in 2014, if growth is sustained.
Much of the growth are being driven by advanced economies and emerging markets are expected to be weaker.
Speaking in a podcast, Olivier Blanchard, Chief economist at IMF described the outlook as a mixed picture. He said "its a case of good news and bad news."
In US performance is still strong and unless there is a physical accident, the IMF chief says he expects the growth to continue.
Japan, he says is also doing well and, in general, advanced economies are expected to sustain their recovery.
But in emerging markets economies, he says growth will be slower than expected as it had declined quite a bit in the last two years due to a combination of physical elements, or probably something deeper, slows down potential growth in the emerging economies.
If the US growth is stronger, he said, it will be a good thing for the world because the US economy generally drives the world economies.
He said managing the world economies is not something IMF can do on a day-to-day basis, and his assessment was based on forecasts for the next two years.
The chief said that if the US economy remains strong, investors will see consider some of the US financial assets more attractive, although they are doing so selectively - not across the board in all economies. `He said not all countries have bonds. Some are fine, some are not.'
In Europe, he agreed that the continent has not turned the corner yet.
In the core Europe, he said growth has gained some foothold and they are now working to verify banks balances which will confirm growth reports in the short term.
In the medium term, he said restructuring reforms will be undertaken to make growth higher. He said it will remain to be seen what happens in the long run.
At the Europe's periphery, there is optimism and there is good news about exports although internal demands are still week.
For this reason, he said, they are not sure the corner has been turned.
* Twitter: @bensonagoha.
No comments:
Post a Comment