IMF lowers its global growth forecast for 2014

By Andrew Walker
BBC World Service Economics correspondent

Image source, AFP

The International Monetary Fund (IMF) has lowered its forecast for global economic growth this year, from 3.7% to 3.4%.

The reduction reflects a weak start to the year in the United States and a number of downgrades to the outlook for several other individual economies.

However there were uplifts for some countries, the largest being the UK.

The global forecast for 2015 is unchanged, with growth predicted to be 4%.

Several countries do receive an upgrade and the largest for 2014 is for the UK - from a 2.8% to a 3.2% expansion of the economy.

It is the latest in a string of upgrades from the IMF and others.

There is a smaller uplift to the IMF forecast for the UK for next year.

Introducing the new forecasts, the IMF's chief economist Olivier Blanchard said: "The recovery continues, but it remains a weak recovery, indeed a bit weaker than we forecast in April."

Nonetheless he said that the headline - the revision for this year - "makes things look worse than they really are".

That is because, he said, "it largely reflects something that has already happened".

"Geopolitical tensions"

The weakness at the beginning of 2014 in the United States - the economy contracted sharply in the first three months - will affect the figure for the whole year.

That was due to bad weather and firms meeting demand by running down stocks of goods to a greater extent than had been expected.

There were downward revisions for several emerging economies, with the largest being for Russia, reflecting what the IMF calls "geopolitical tensions".

That country's growth projection for this year is now just 0.2%, a downgrade from the previous World Economic Outlook forecast of 1.3%.

But the IMF referred to that same figure at the end of April, so it cannot fully reflect the most recent intensification of the international political crisis following the loss of the Malaysian airliner.

Brazil's outlook is also markedly weaker, due to a lack of confidence among businesses and consumers.

There is also an upward revision for Spain, one of the countries at the centre of the Eurozone financial crisis - by 0.3 and 0.6 percentage points this year and next.

Even so, the forecasts for Spain are still fairly sluggish by pre-recession standards: 1.2% this year and 1.6% in 2015.

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