IMF more optimistic about Jamaica’s main trading partners, global growth
THE International Monetary Fund is slightly more optimistic about the economies of Jamaica’s main trading partners this year than it was three months ago, even though it now holds a less positive view of the Latin America and Caribbean (LAC) region.
In an updated outlook released yesterday, the global lending organisation forecasts that the world economy will grow 3.7 per cent in 2014 and that the US economy will grow 2.8 per cent.
The global forecast is 0.1 percentage point higher and the US forecast 0.2 point higher than the IMF’s October forecast.
The UK and Canada are expected to grow by 2.4 per cent and 2.2 per cent, respectively, in 2014, or 0.6 and 0.1 percentage points higher than the multilateral expected three months ago.
The LAC is expected to grow by three per cent, or 0.1 point less than the October forecast. And while the IMF didn’t give a complete breakdown of the region’s expected performance, it projected that Brazil’s growth would be 0.2 percentage points lower in 2014 than it projected three months ago.
After a sluggish start, global economic growth picked up in the second half of 2013. As a result, growth amounted to three per cent last year.
The IMF expects it will be even stronger growth this year. The IMF forecasts that the US economy grew 1.9 per cent last year. And its 2.8 per cent forecast for this year would match US growth in 2012.
Part of the anticipated improvement is based on expectations for less drag from higher US taxes and across-the-board spending cuts. By 2015, the IMF forecast the US economy will grow three per cent, or 0.4 percentage point lower than its October forecast. The IMF reduced its outlook because a recent budget agreement left in place most of the spending cuts.
The IMF had expected most of those cuts to have been eliminated by next year. For the countries in Europe using the common euro currency, the IMF forecasts stronger growth.
The region is emerging from recession after a lingering debt crisis. Economic activity shrank 0.7 per cent in 2012 and 0.4 per cent in 2013. But this year the IMF projects one per cent growth and 1.4 per cent in 2015.
Germany, the biggest economy in Europe, will grow 1.6 per cent this year, it projects, up from 0.5 per cent growth in 2013. China is expected to grow 7.5 per cent in 2014 and 7.3 per cent in 2015. Both 2014 and 2015 projections were slightly higher than the IMF’s October forecast, but lower than the 7.7 per cent growth reported for 2013.
The IMF said that growth in China, the world’s second-largest economy, had rebounded strongly in the second half of 2013 due to acceleration in investment.
But the IMF said the growth will be moderate because of actions by the government to slow growth in credit. For Japan, the IMF forecast growth of 1.7 per cent this year, the same as 2013, but a slowdown to 1 per cent growth in 2015.
The IMF said that the United States and other major economies should be careful not to pull back prematurely on the economic support being provided by the Federal Reserve and other central banks.
That’s because unemployment in many countries remains high and inflation is low.