The global economy appears to be transitioning toward a period of more stable, but slower growth. Global gross domestic product (GDP), which slowed in mid-2012 is recovering, and a modest acceleration in quarterly GDP is expected during the course of 2013. That progress will be masked in the annual data, however, with whole-year growth for 2013 projected at 2.2 percent, a touch slower than in 2012. The strengthening of quarterly growth will show up in whole-year global GDP growth of 3.0 percent for 2014 and 3.3 percent in 2015 (table 1 - the outlook summary table).
Financial conditions in high-income countries have improved and risks are down, but growth remains subdued, especially in Europe
High-income countries continue to face challenges to restore financial sector health, reform institutions, and get fiscal policy onto a sustainable path. However, the likelihood that these challenges provoke a major crisis has declined.
Although acute risks have diminished, real-side activity remains sluggish. Among high-income countries, the challenges are especially difficult in high-income Europe, where growth is being held back by weak confidence and continued banking-sector and fiscal restructuring. The recovery is on more solid ground in the United States, where a fairly robust private sector recovery is being held back, but not extinguished, by fiscal tightening. Meanwhile, in Japan, a dramatic relaxation of macroeconomic policy has sparked an uptick in activity, at least over the short term. Overall, growth in high-income countries is projected to accelerate slowly, with GDP expanding a modest 1.2 percent this year, but firming to 2.0 and 2.3 percent in 2014 and 2015, respectively.
Growth is firming in developing countries, but conditions vary widely across economies
In developing countries, GDP is expected to firm somewhat. Less volatile external conditions, a recovery of capital flows to levels that support growth, the relaxation of capacity constraints in some middle-income countries, and stronger growth in high-income countries are expected to yield a gradual acceleration of developing-country growth to 5.1 percent this year, and to 5.6 and 5.7 percent in 2014 and 2015, respectively.