MOSCOW, July 24 (RIA Novosti) - The global economy is recovering at a weaker-than-expected rate largely due to poor economic performance of the United States, the International Monetary Fund (IMF) announced Thursday at the launch of its World Economic Outlook (WEO) Update.
“The headline number, namely the revision of the forecast of world growth in 2014 from 3.7% in April to 3.4% today, makes things look worse than they really are. To a large extent, it reflects something that has already happened, namely the large negative US growth rate in the first quarter,” IMF Chief Economist Olivier Blanchard noted in the opening remarks to his presentation in Mexico City, admitting that the downward adjustment “reflects a number of small downward revisions, both in advanced and in emerging economies.”
Blanchard argued that the change is short of being dramatic, as it simply echoes the countries’ “high levels of public and private debt, which act as brakes on the recovery.” While these brakes are “coming off,” the respective rates across countries vary significantly.
The WEO presents the IMF global-scale analysis and forecasts of key economic developments, released in April and September-October each year with separate updates announced and published if the economic circumstances so require.
The July Update is very cautious to jump to any conclusions as the gradually broadening recovery taking hold in advanced economies seems very easy to frighten off. Investors may once again start getting worried about debt sustainability, signaling a return to fiscal consolidation.