Underlying Economic Conditions

According to the International Monetary Fund (IMF), the global economy will experience slightly higher growth in 2014 than in the previous year. The IMF forecasts that world GDP will rise by 3.7 percent (2013: 3.0 percent). For 2015, the IMF predicts 3.9 percent. Upward momentum in 2014 will mainly come from emerging markets, with an increase of 5.1 percent. Advanced economies will deliver GDP growth of 2.2 percent. The eurozone economy is expected to grow for the first time since 2011.

Stronger Expansion for US Economy

Unemployment and high indebtedness are the major problems facing the US economy. On the other hand, it is benefiting from a strong reindustrialization process. The Organisation for Economic Co-Operation and Development (OECD) expects growth of 2.9 percent there. For 2015, the OECD estimate is 3.4 percent.

GDP Trends in 2014

GDP Trends in 2014 (bar chart)GDP Trends in 2014 (bar chart)

Sources – worldwide: IMF; Asia: ADB; China: ADB; India: ADB; Japan: OECD; USA: OECD; Europe: IMF; Germany: IMF

Asia to Rely More on Sustained Economic Expansion

In China, the days of double-digit growth are over. The country’s economy is still growing at a high single-digit rate, though. The Chinese government has altered its growth strategy. It is focusing more on robust domestic demand and less on infrastructure projects worth billions or overly strong export growth. The Asian Development Bank (ADB) expects the Chinese economy to expand by 7.4 percent. For 2015, the OECD anticipates a gain of 7.5 percent. In India, growth has been impeded by insufficient investment, an underdeveloped infrastructure and the failure to push through economic reforms. The ADB expects GDP to rise by 5.7 percent in 2014 compared with the previous year. In Japan, the economy will continue expanding in 2014. The OECD forecasts growth of 1.5 percent year on year, and 1.0 percent for 2015. Overall, Asia will deliver much higher growth rates than the other regions over the next two years. According to the ADB, Asian economies will expand 6.2 percent compared with 2013.

Europe to Return to Growth for First Time Since 2011

The IMF expects Europe to pull out of recession in 2014 and generate marginal growth. After the economic contraction of the past two years, the IMF estimates that GDP for 2014 will edge up by 1.0 percent. Successful budgetary consolidation in individual countries could then lead to stronger GDP growth in 2015. The OECD takes the view that an increase of 1.6 percent is possible. In Germany, economic experts forecast stronger growth than elsewhere in Europe. The IMF’s estimates are for a 1.6 percent rise. High employment levels and consumer spending will be key to this upturn. The OECD predicts that GDP will increase by 2.0 percent in 2015.