World economy on recovery road, but weak inflation threatens: Reuters poll

Thu Jan 16, 2014 11:49am EST
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By Andy Bruce

LONDON (Reuters) - A much better year lies in store for most of the world's major developed economies, although weak inflation will persist, complicating central banks' ability to get interest rates back to normal, Reuters polls forecast on Thursday.

As in the last few years, the United States looks set to the lead the way, with growth also quickening in Britain and Germany.

However, Japan looks set to disappoint and the euro zone will probably lag again compared with its Western peers. Emerging markets again look a mixed bag.

Perhaps the main difference this year is that forecasts from the 300 or so economists polled across the world over the last week at least suggest little prospect of a return to recession in the euro zone, the world's largest trading bloc.

Overall, the poll showed the world economy will grow 3.6 percent this year compared with 2.9 percent in 2013.

That would snap a three-year stretch of slowing global growth since the world economy first rebounded from the severe recession of 2009.

The last few months have been marked by steeply falling inflation in many of the top developed economies, with consumer prices rises in some cases far below stability targets set by their central banks.

Christine Lagarde, head of the International Monetary Fund, on Wednesday warned of the risk of deflation - a damaging and sustained spiral of falling prices - even as she was optimistic about improving economic growth.   Continued...

Merchandise sits at the Amazon Phoenix Fulfillment Center in Goodyear, Arizona, in this file image from November 16, 2009. REUTERS/Rick Scuteri/Files