Economy
IMF Boosts U.S. and Global Growth Forecasts, Warns of Inflation Risk
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The global economy will expand at 3.7% this year, the International Monetary Fund (IMF) forecast in its latest World Economic Outlook, released Tuesday. That is up from a 3.6% forecast back in October. The projection for global growth in 2015 is now at 3.9%.
U.S. gross domestic product (GDP) will see a gain of 2.8% this year, and that in the United Kingdom will increase by 2.4%. That is up from 2.6% and 1.9%, respectively, in the previous period. The IMF also raised its forecasts for growth in Germany and Spain, but lowered that of Italy and left France’s unchanged.
The forecast for Japan’s GDP growth rose from 1.2% in the previous period to 1.7% in the new outlook. China, the second-largest economy in the world, now is projected to grow 7.5%. While that is greater than the 7.3% estimate in the October outlook, it is down from 7.7 GDP growth last year.
Dangerously low inflation could put the global economic recovery at risk in 2014, according to the IMF. Low inflation may turn into deflation if the economy receives a shock. And that could result in a downward spiral of activity as consumers delay spending, expecting cheaper prices in the future.
The IMF report urged advanced economies to maintain monetary accommodation to bolster the global economic recovery.
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