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IMF positive about economy

January 21, 2014

The International Monetary Fund (IMF) has raised its outlook for the global economy for the first time in nearly two years. It said major nations had put good incentives in place to foster growth and consumption.

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Chinese engineers at work
Image: picture-alliance/dpa

In an updated outlook released Tuesday, the IMF forecast the world economy would grow by 3.7 percent in 2014, slightly up from its 3.6-percent prediction in October of last year.

The international lending organization said its optimism was based on global recovery indicators as countries started moving away from austerity budgets and financial systems appeared more stable after implementing recapitalization schemes.

"The basic reason behind the stronger recovery is that the brakes are progressively being loosened," IMF Chief Economist Olivier Blanchard said in a press release.

Germany going strong

Looking at the prospects of individual nations, IMF officials said the US would be able to enjoy 2.8-percent growth this year, 0.2 percent higher than predicted in October. Part of the anticipated improvement was based on expectations for less drag from higher taxes and across-the-board spending cuts.

Rosy outlook

For the eurozone, the lender projected a 1-percent expansion of the economy in 2014 and 1.4-percent growth in 2015. Europe's biggest economy, Germany, was seen adding another 1.6 percent to its gross domestic product (GDP), up from 0.5-percent growth in 2013.

The IMF warned, though, the US and other major economies should be careful not to pull back prematurely on the financial support provided by the Federal Reserve and other central banks while unemployment was still alarmingly high and inflation remained unusually low.

hg/slk (AP, AFP)