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World Economic Prospects
Publication year - 2014
Publication title -
economic outlook
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.1
H-Index - 8
eISSN - 1468-0319
pISSN - 0140-489X
DOI - 10.1111/1468-0319.12128
Subject(s) - pace , economics , emerging markets , china , real gross domestic product , balance of payments , quarter (canadian coin) , monetary economics , international economics , macroeconomics , geography , archaeology , geodesy
Overview: World growth to remain moderate in 2015Global growth is expected to remain moderate in 2015. We expect world GDP to rise by 2.8%, a bit higher than the 2.6% estimate for 2014 but still below the average pace seen over the last 20 years. We also expect a divergent performance between the advanced and emerging economies, with the former strengthening while growth in the latter slows further. The improvement in the advanced economies will be led by the US. The strong trend in US payrolls growth increases our confidence that next year will see a significant upturn in US consumer spending – still around a quarter of the global total. We expect US consumption to rise 2.8% next year, helping GDP growth reach 3% ‐ the strongest pace since 2005. Meanwhile we expect another robust year of growth in the UK and modest improvements in the Eurozone and Japan. The further decline in oil prices to around US$70 per barrel, where we expect them to broadly stay in 2015, will boost the advanced economies. With significant monetary expansions in Japan and the Eurozone also helping, we forecast G7 GDP growth at 2.1% in 2015, up from 1.6% this year. But as 2014 draws to an end, the outlook for the key emerging economies remains clouded. Russia has entered a balance of payments crisis and will see a sharp drop in GDP next year. We have also cut Brazil's 2015 GDP forecast to just 0.7% this month. Meanwhile, China surprised markets at the end of November by cutting rates. Further easing measures are likely but we are minded to view this policy shift as confirming our concerns about slowing growth. Overall, we expect that emerging market GDP growth in 2015 will edge down to 3.9% from 4.1% this year – the slowest pace since 2009. One side effect of this may be even more intense competition in world export markets, adding to global disinflationary pressures – we expect inflation at 1.7% in the US, 1.0% in the UK and 0.6% in the Eurozone in 2015. This in turn reinforces our view that global interest rates will rise only very modestly next year.