The IMF said that the growth of the global economy is heating up and that worldwide GDP will be 4% this year. Last October the estimate was as low as 3.1%. China, of course, is at the lead with anticipated improvement in GDP of 10%. As the world’s second or third largest economy, its influence on the numbers cannot be overestimated.
The IMF’s figures is also based on a relatively strong improvement in US GDP.
Economic activity in South America and Africa will also improve sharply, although Africa is only a minor global economic region. That leaves the European Union, which has a greater GDP than the US. As a matter of fact, the IMF puts European Union GDP at $15.2 billion, which is larger than China, Japan, and India combined.
For the 4% number to be realistic, the US and EU will probably have to reach and sustain economic improvement that does not crawl along the flat line. Economists claim that the American economy can expand even with nearly 10% unemployment. That remains to be seen, especially in the second half of the year when consumer spending is likely to stay anemic. Europe’s economy, based on some estimates, will be harmed by the massive cloud of ash coming from Iceland, a country that some Europeans bailed out. Irony, if there ever was any.
The recovery in the West is still on travels on unsteady feet. That means that China and Germany’s large export machines could be slowed. Where the IMF sees a formula for growth, uncertainly is a more credible.
Douglas A. McIntyre
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