The gross domestic product (GDP) of a country can be defined as the value of the total final output of all goods and services produced in a single year within a country's boundaries. The growth is expressed as a percent.
David Lipton, IMF’s First Deputy Managing Director, discuss the need to speed up efforts to invigorate global growth and take steps to prevent some of the very real downside risks of prolonged low growth.
According to the International Monetary Fund’s latest assessment, “Despite setbacks, an uneven global recovery continues” in 2014. However, the fund lowered its previous estimates. “Largely due to weaker-than-expected global activity in the first half of 2014, the growth forecast for the world economy has been revised downward to 3.3 percent for this year, 0.4 percentage point lower than in the April 2014 World Economic Outlook (WEO)”, says the October 2014 World Economic Outlook report. “The global growth projection for 2015 was lowered to 3.8 percent.’
The most recent survey by the IMF about growth prospects around the world, published in October 2014, found that “downside risks have increased since the spring. Short term risks include a worsening of geopolitical tensions and a reversal of recent risk spread and volatility compression in financial markets. Medium-term risks include stagnation and low potential growth in advanced economies and a decline in potential growth in emerging markets.”
of GDP change
In advanced economies, the IMF calls for “continued support from monetary policy and fiscal adjustment attuned in pace and composition to supporting both the recovery and longterm growth.” The urgency of this type of interventions is particularly felt in the European Union, which has grown on average only 1% a year over the last decade (with the economy expected to expand 1.4% in 2014 and 1.8% in 2015), and even more so in the Eurozone. Here, growth has averaged only 0.7% a year for the last ten years and is predicted to hover around 0.8% in 2014 and 1.3% in 2015.
The IMF also recommends that public infrastructure investment be dialled up across the world, as “it can also provide support to demand in the short term and help boost potential output in the medium term,” and that, in advanced economies as well as emerging market and developing economies, structural reforms be pushed through in a timely manner, in order “to strengthen growth potential or make growth more sustainable.”
Among advanced economies, the United States and the United Kingdom stand out for the more sustained recovery they have achieved over the last few months. The American economy is expected grow 2.2% this year and 3.1% in 2015, while the UK’s should expand by 3.2% in 2014 and 2.7% next year.
China and India continue growing at faster than average paces, albeit no longer at the speed at which their economies were expanding in the first decade of the new millennium. For many years, for example, China’s economy was getting bigger at an average rate of around or above 10%, while it is calculated to grow only 7.4% in 2014 and 7.1% in 2015, which, according to experts, is the bare minimum required for China to remain stable. India, which has encountered sudden headwinds in the last year or so, should return to more reasonable, though no longer astounding, growth, expanding by 5.6% in 2014 and 6.4% in 2015.
In the meantime, the Brazilian and Russian economies, which for several years had been posting very high growth rates, have now stalled, due to political instability and economic volatility. Brazil is predicted to grow only 0.3% this year and 1.4% in 2015 while Russia should come in at 0.2% in 2014 and 0.5% in 2015.
Overall, the IMF predicts global growth to come in at 3.3% in 2014 and 3.8% in 2015.
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