In July, the International Monetary Fund (IMF) released a report entitled An Uneven Global Recovery Continues. In the report, current economic situations have been described in four different aspects.
The global growth projection for 2014 has been marked down by 0.3 percent to 3.4 percent, reflecting both the legacy of the weak first quarter, particularly in the United States, and a less optimistic outlook for several emerging markets. With somewhat stronger growth expected in some advanced economies next year, the global growth projection for 2015 remains at 4 percent.
Global growth is expected to rebound from the second quarter of 2014, as some of the drivers underlying first-quarter weakness, such as the inventory correction in the United States, should have only temporary effects, and others should be offset by policies, including in China. But the first-quarter setback will only be partially offset.
Downside risks remain a concern. Increased geopolitical risks could lead to sharply higher oil prices. Financial market risks include higher-than-expected U.S. long-term rates and a reversal of recent risk spread and volatility compression. Global growth could be weaker for longer, given the lack of robust momentum in advanced economies despite very low interest rates and the easing of other brakes to the recovery.
In many advanced and emerging market economies, structural reforms are urgently needed to close infrastructure gaps, strengthen productivity, and lift potential growth.
While the report gives us a bleak outlook for the near future, the reality isn’t getting easy on us either. According to Business Insider’s recent post, “the report, compiled with the OECD and International Labour Organisation, said more than 100 million people were unemployed in G20 economies and 447 million were considered ‘working poor,’ living on less than US$2 a day. It said despite a modest economic recovery in 2013-14, global growth was expected to remain below trend with downside risks in the foreseeable future, while weak labor markets were constraining consumption and investment. ”
However, the IMF report suggests possible way out for this situation including by rising interest rates and weakening emerging economies.
Read the full report here.