IMF predicts increased growth in 2014 but warns against complacency

Britain will perform best of all the world’s major economies this year, according to the International Monetary Fund.


Growth of 2.9% is expected as consumer spending recovers, inflation remains low and unemployment continues to fall.


However, it will not all be plain sailing as the think-tank believes a background of weak exports and low business investment could yet have an impact.


The IMF suggested that growth in the US markets and a turnaround in the UK would ultimately see the global economy benefit.


Chief economist Olivier Blanchard has also warned of increasing income inequality, resulting from a growing divide between levels of income and wealth.


This year, the US and Britain will be among the leading nations in the world to generate growth, as other emerging economies in Asia, Africa and South America experience a slowdown.


The forecasts of 2.9% growth apply to 2014, while it is expected to slow to 2.5% in 2015, suggesting that businesses should proceed with caution.


A watchful eye on the future


Many will still have the same warning bells that signalled the start of the recession ringing in their ears, and many could seek corporate insolvency advice regarding their futures before embarking on major investment.


Learning from the past could be vital in the coming months, especially as Mr. Blanchard has warned of potential traps for policy makers who act too early.


“Acute risks have decreased but risks have not disappeared,” he said.


Tensions in the UK, volatile stock markets and possible interest rate rises mean the horizon is not yet entirely clear of obstacles to economic development.


Previous predictions from the IMF estimated growth levels at 2.4%, while the new figure places Britain ahead of the US (2.8%), Canada (2.3%) and Germany (1.7%) in terms of growth.


World growth meanwhile is expected to reach 3.6% this year, rising to 3.9% in 2014.


“Put simply, the recovery is strengthening,” added Mr. Blanchard. “The various brakes that hampered growth are being slowly loosened.”


By Phil Smith


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