20th January 2015
The global economy continues to falter in its recovery and the most recent setback comes from the International Monetary Fund (IMF), which cut its global forecasts for growth due to slowing economies in China, Europe and Russia’s economic woes. However, stocks rise in Europe ahead of the long-awaited bond-buying programme from the European Central Bank (ECB).
It seems that a number of negative factors have contributed to overshadow the boost gained from falling oil prices, according to the IMF, which cut its global growth for 2015 to 3.5 per cent, compared to initial expectations for growth of 3.8 per cent.
The US was the only economy that it upgraded its growth projections for, raising its 2015 forecast to 3.6 per cent from 3.1 per cent. However, the IMF kept forecasts as they were at 2.7 per cent for the UK this year, and nudged its 2016 projection down to 2.4 per cent from 2.5.
“Today’s IMF forecast shows that Britain is pulling ahead, while the global economy is being downgraded,” said the UK’s chancellor, George Osborne. He continued to point out that the UK’s economy grew the fastest in 2014 out of all the nations in the G7 and is set to expand in 2015.
Despite these gloomy predictions for the global economy, shares in Europe advanced for the fourth consecutive day to extend the highest levels seen in seven years. The driving force behind this recent run of gains is widely attributed to the mounting speculation that the ECB will begin its much awaited quantitative easing programme on Thursday.
Furthermore, European equities gained a boost on the back of the ZEW survey of economic sentiment, which showed confidence in Germany soaring to an 11-month high in January, exceeding expectations due to the benefits of low oil prices, a weak euro and the potential bond-buying programme from the ECB.
It raised hopes that the biggest economy in Europe will rebound from a slight weakening in the latter half of 2014 and offset uncertainties such as the effects of the Greek crisis.
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