The world economy has strengthened gradually since January, driven by the positive signals from the U.S. and the “soft landing” of China, and will grow to 3.5% in 2012 and 4.1% in 2013, according to “Global Economic Prospects” published today by the International Monetary Fund (IMF).
Each data represents an improvement of two tenths, compared with those anticipated by the IMF in January (3.3% and 3.9%), and include a slight upward revision to the eurozone, although the Fund maintains that close 2012 in recession.
The Fund cut its economic contraction in the eurozone of 0.5% to 0.3% by 2012, and stressed a return to positive territory in 2013, which stood at 0.9% over the previous 0.8%, despite to highlight the context of “weakness” of the old continent.
The causes of this comprehensive review are, according to the IMF in recent U.S. economic data, the strength shown by emerging economies to reduce the demand for the advanced and the best policy responses given by the European authorities to the crisis debt.
In this sense, the international organization noted that emerging economies continue to perform well despite the brake advanced economies, and are expected to grow 5.7% in 2012 and 6% in 2013, two tenths and one tenth than forecast in January.
The Asian giant, China, continues to lead this “soft landing”, with figures for the next two years more than 8% (8.2% and 8.8%), followed by India, which will grow by around 7% (6 , 9% and 7.3%) in the same period.
In the other hemisphere, Latin America also continues its strong growth, at an estimated rate of 3.7% in 2012 and 4.1% in 2013 (compared to 3.5% and 4% expected in January), thanks to keeping the prices of raw materials, sound macroeconomic policies and the return of capital flows.
The main economies of the region, Brazil and Mexico, are also increased its growth forecast for the next two years, with 3% and 4.1% with respect to Brazil, and 3.6% and 3.7 % with respect to Mexico, and continue as engines of the region.
However, despite drawing a slightly more optimistic outlook in January, the Fund warned that the global economy still shows clear signs of “weakness”, and urged advanced economies to maintain the path of reforms.
Precisely, says the IMF, advanced economies are facing major downside risks.
On the one hand, the pace of adjustment in fiscal consolidation in some countries may slow global growth and should be balanced in the medium term, especially in the case of U.S. and Japan, not ultimately affect global demand.
Furthermore, the high indebtedness of the financial sector, mainly in Europe, has caused a decline in credit available with considerable effects on the weak economies of the eurozone so it is necessary to stimulate the flow to normal levels.
Regarding the Middle East and North Africa, the economic situation remains contained because of civil unrest and political uncertainty, with an estimated growth of 4.2% in 2012 (3.6% in January) and 3 , 7% (4.4% in January) in 2013.
The IMF also warns of possible effects of a further drop in energy demand with effects on the producing countries in the region who have recently increased public expenditure towards the poorer classes.
Finally, sub-Saharan Africa will grow by 5.4% (5.5% in January) in 2012 and 5.3% (same as in January) in 2013 thanks to high oil prices, minerals and other raw materials, with Nigeria, Angola and Kenya to the head.
Category: Mutual Funds