16 April 2013 22:42 [Source: ICIS news]
HOUSTON (ICIS)--The world economy should grow by 3.3% this year and by 4.0% in 2014, as the advanced economies continue recovering, the International Monetary Fund (IMF) said on Tuesday.
The advanced economies, which include the US, the eurozone and Japan, should grow by 1.2% this year and by 2.2% in 2014, the IMF said in its World Economic Outlook (WEO).
The US should grow by 1.9% this year and 3.0% in 2014. Although US GDP growth for 2013 is not very high, it comes in the face of what the IMF called overly strong fiscal consolidation of about 1.8% of GDP.
Private demand is actually strong because many in the US expect the nation's central banker to keep interest rates low, the IMF said. Plus, there is pent-up demand for housing and durable goods.
The euro area's economy will shrink by 0.3% this year and grow by just 1.1% in 2014, the IMF said. This year, both the periphery and the core of the euro area are weak.
The fund expects Germany's economy to grow by less than 1% in 2013, while France's will likely shrink, the IMF said. The economies of Italy and Spain should shrink by more than 1% in 2013 before growing slightly in 2014.
In Asia, Japan will likely grow by 1.6% in 2013 because of its new policy, adopted to reverse years of deflation and almost nonexistent growth, the IMF said. Under the new policy, Japan will rely on aggressive quantitative easing, a positive inflation target, fiscal stimulus and structural reforms.
Emerging markets and developing economies should grow by 5.3% in 2013 and 5.7% in 2014, the IMF said.
China should grow by 8.0% this year and by 8.2% in 2014, the IMF said. Growth this year should reflect continued strong domestic demand and renewed external demand.
India should grow by 5.7% this year and 6.2% in 2014. The IMF expects external demand to improve and for India to adopt measures that should promote growth in the economy.
However, India will still contend with structural challenges, which will limit how quickly its economy can grow, the IMF said.
Latin America and the Caribbean should grow by 3.4% this year and 3.9% in 2014. The IMF said the region should benefit from rising external demand as well as earlier policy easing in some countries.
"Emerging market and developing economies are still going strong, but in advanced economies there appears to be a growing bifurcation between the United States on the one hand and the euro area on the other," said Olivier Blanchard, chief economist of the IMF. He made his comments during the WEO Conference.
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