IMF report on world economy

Growth in 2014 has been weaker than expected and potential growth rates are being revised down.   

Europe

The outlook is most positive for the US and Japan.  The Eurozone is recovering but that recovery is weaker than expected and not all European countries are growing.  Italy and France are hovering around zero growth and growth in Germany is way below its normal rates. Key areas of concern highlighted in the report include:

• Low inflation (lowflation)
• Supply side roadblocks to growth – high unemployment and low investment could reduce ability to grow
• Reform fatigue and reduced appetite for European initiatives

The report states that Europe must continue to introduce reforms to help simplify Europe’s fiscal framework; roll out effective training programmes to reduce youth unemployment; open up protected professions; promote cross border provision of services; develop capital markets;  and continue labour market reforms.

Sources: The IMF;