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Global Economy to See Modest 3.3 Percent Growth in 2014
IHS Top10 Predictions foresees an end to "wallowing in an economic soft patch"
LEXINGTON, Mass.--(BUSINESS WIRE)-- After wallowing in an economic "soft patch" for the past two years, the global economy is likely to emerge in 2014 with modest growth of 3.3 percent compared with 2.5 percent this year, according to a forecast from Nariman Behravesh, chief economist of IHS (NYSE:IHS), the global leader in information and analytics.
"The easing of the twin headwinds of private sector de-leveraging and public sector austerity will bolster the improved outlook, especially for the developed economies," Behravesh says. "Many emerging economies will also likely enjoy stronger growth in 2014, pulled along by export-led growth to the United States, Europe and China. That said, the global growth rebound is likely to be quite modest."
The global growth outlook for 2014 is the summary forecast in Behravesh's annual Top10 Economic Predictions, which were released today.
The U.S. economy is forecast to slowly speed up. The drag from fiscal policy will be less, allowing underlying strengths in the economy -- such as housing, the ripple effects of the boom in unconventional oil and gas production, steady growth of consumer spending, and an uptick in capital spending -- to become more visible, resulting in growth of 2.6 percent in 2014, compared with 1.7 percent in 2013.
Despite signs of weakness, the European recovery will continue, but at a very sluggish pace. Forecast growth of 0.8 percent will be supported by very accommodative monetary policy, stabilizing labor markets, less emphasis on austerity, improved spending power, better competitiveness in peripheral countries and greater confidence in Eurozone politicians to manage their sovereign debt crisis. Germany and the United Kingdom will grow faster than they did in 2013; Greece, Italy and Spain will struggle to attain positive growth.
IHS expects China's growth to inch up from 7.8 percent in 2013 to 8.0 percent in 2014. The government is expected to apply additional moderate stimulus if growth dips below 7.5 percent and stronger stimulus if it goes below 7.0 percent as China looks ahead to problems of an aging population and the consequences of rapid credit growth, including a new housing bubble and rising debt levels.
The other Top10 predictions include:
For 2013, IHS forecast that global growth would hold steady at 2.6 percent and it stabilized at around 2.5 percent. Nine out of 10 predictions for 2013 were on the mark.
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