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Global Economic Recovery To Keep Strengthening

Jan 22, 2014
Originally published on January 22, 2014 7:12 am
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RENEE MONTAGNE, HOST:

Now despite the news of brick-and-mortar retail closures, the International Monetary Fund says U.S. and global economies are strengthening. In an update of its World Economic Outlook, the IMF boosted its forecast for global growth slightly for the first time in a couple of years.

NPR's John Ydstie reports.

JOHN YDSTIE, BYLINE: The IMF says the world recovery is strengthening and that economic activity is likely to expand 3.7 percent in 2014. Advanced economies are leading the way. The IMF says it now expects the U.S. economy to grow 2.8 percent this year.

Olivier Blanchard, the IMF's top economist, says even Europe is healing.

OLIVIER BLANCHARD: Even there things are better. We'll predicting positive growth in all the Eurozone members.

YDSTIE: It's been years since that's happened. But the IMF says there are still dangers in Europe, including a 10 to 20 percent chance of damaging deflation which could curb consumer demand and increase debt burdens.

Japan, which has struggled against deflation in the past couple decades, is growing again, helped by big government stimulus. The IMF boosted its estimate for growth in Japan's by nearly half a percent to 1.7 percent. The IMF says the world's second largest economy, China, will grow seven-and-a-half percent in 2014, faster than it had predicted in its original estimate. But it says China faces a difficult balancing act containing risks in its financial sector.

While advanced economies are expected to expand faster, major emerging markets like Russia and Brazil had their growth forecasts downgraded.

John Ydstie, NPR News, Washington. Transcript provided by NPR, Copyright NPR.