The economic recovery in the euro area seems broadly on track, with a generally robust recovery in domestic demand and inflation beginning to increase, the International Monetary Fund said on July 9 in an update of its World Economic Outlook.
Growth projections have been revised upward for many euro area economies, but in Greece, “unfolding developments are likely to take a much heavier toll on activity relative to earlier expectations,” the IMF said.
Global growth is projected at 3.3 per cent in 2015, marginally lower than in 2014, with a gradual pickup in advanced economies and a slowdown in emerging market and developing economies. In 2016, growth is expected to strengthen to 3.8 per cent.
Growth in advanced economies is projected to increase from 1.8 per cent in 2014 to 2.1 per cent in 2015 and 2.4 per cent in 2016, a more gradual pickup than was forecast in the April 2015 WEO.
The unexpected weakness in North America, which accounts for the lion’s share of the growth forecast revision in advanced economies, is likely to prove a temporary setback, the IMF said.
The underlying drivers for acceleration in consumption and investment in the United States—wage growth, labour market conditions, easy financial conditions, lower fuel prices, and a strengthening housing market—remain intact, the Fund said.
(Photo: Piotr Lewandowski/sxc.hu)