The IMF has cut its forecast for global economic growth at the same time as lifting its UK growth projection.
The International Monetary Fund now expects global growth of 2.9% this year, a cut of 0.3% from July’s estimate. In 2014 it expects global growth of 3.6%, down 0.2%.
It cited weakness in emerging economies for the cut.
The forecast for UK growth this year received a significant upgrade to 1.4%, up from July’s estimate of 0.9%.
And for next year the IMF expects UK growth of 1.9%, up from July’s projection of 1.5%.
The IMF’s upgrades for its outlook on the UK are larger than those it made for any other country in its World Economic Outlook – its twice-yearly assessment of the global economy.
It credited recent data indicating higher consumer and business confidence, for the increase.
However, it warned that it would still take years for the UK economy to recover fully from the 2008 financial crisis. It suggested that the government could help boost growth by bringing forward planned public infrastructure spending, such as building new homes.
The IMF has cut its forecast for global economic growth at the same time as lifting its UK growth projection
The UK Treasury said the IMF upgrade showed the government’s economic strategy was working.
“But risks to the global economy remain high, and the recovery cannot be taken for granted. That is why the government will not let up in implementing its economic plan,” a spokesman added.
Despite the improvement in growth in advanced economies such as the UK and US, the IMF warned that a slower pace of expansion in emerging economies such as Brazil, China and India, was holding back global expansion.
The IMF expects growth in Russia, China, India and Mexico to be slower than it forecast in July.
In part, it says this is due to expectations of a change in policy by US central bank the Federal Reserve. Simply the expectation that the US could trim back its efforts to stimulate the US economy has already had an impact on interest rates in emerging economies, the IMF said.
It said an increasing belief that China’s growth rate would slow would also hit global growth.
The IMF expects the US to drive global growth.
But it warns that the political standoff over raising the US government’s borrowing limit, if it results in the US defaulting on its debt payments, “could seriously damage the global economy”.
The IMF expects growth of 1.6% in the US this year and 2.6% next year, down 0.1% and 0.2% from its July forecast.
In the euro area, the IMF says business confidence indicators suggest activity is close to stabilizing in peripheral economies, such as Italy and Spain, and already recovering in core economies such as Germany.
Overall, it predicts growth will fall 0.4% this year, an improvement of 0.1% on its July prediction, and grow 1% next year.
“In short, the recovery from the crisis continues, albeit too slowly,” said Olivier Blanchard, economic counselor at the IMF.
“The architecture of the financial system is evolving, and its future shape is still unclear. These issues will continue to shape the evolution of the world economy for many years to come.”
According to a new study produced by the Economist Intelligence Unit (EIU), Switzerland is the best place to be born in the world in 2013, and the U.S. is just 16th.
The study says American babies will have a dimmer future than those born in Hong Kong, Ireland and even Canada.
The EIU, a sister company of The Economist, attempted to measure how well countries will provide the best opportunities for a healthy, safe and prosperous life in years to come.
People born in Switzerland will tend to be the happiest and have the best quality of life judged in terms of wealth, health and trust in public institutions, according to the analysis.
The Scandinavian countries of Norway, Sweden and Denmark also all make the top five in a “quality-of-life” index highlighting where it is best to be born next year.
In 1988, the U.S. came top of a rank of 50 countries, though has not achieved the top spot since.
The index links the results of subjective life-satisfaction surveys – how happy people say they are – to objective determinants of quality of life across countries.
One of the most important factors is being rich, but other factors come into play – including crime, trust in public institutions and the health of family life.
In total, the index takes into account 11 indicators.
According to EIU study, Switzerland is the best place to be born in the world in 2013, and the US is just 16th
These include fixed factors such as geography, others that change slowly over time such as demography, social and cultural characteristics, and the state of the world economy.
The index also looks at income per head in 2030, which is roughly when children born in 2013 will reach adulthood.
Small economies dominate the top 10 countries, with Australia coming second and New Zealand and the Netherlands not too far behind.
Half of the top 10 countries are European, but only one, the Netherlands, is from the euro-zone.
The crisis-ridden south of Europe, including Greece, Portugal and Spain, lags behind despite the advantage of a favorable climate.
Interestingly, the largest European economies – Germany, France and Britain – do not do particularly well.
Nigeria has the unenviable title of being the worst country for a baby to enter the world in 2013.
Despite their economic dynamism, none of the BRIC countries – Brazil, Russia, India and China – score impressively.
Brazil ranked 37, China came in 49th and India was 66th and Russia came in 72nd out of 80 countries listed in the index.
China’s President Hu Jintao has promised to maintain economic growth to support a global recovery, at the start of an Asia-Pacific summit in the Russian port city of Vladivostok.
China would pursue steady policies and seek to boost domestic demand, he said.
He was speaking ahead of the start of the Asia-Pacific Economic Co-operation (APEC) summit.
All countries in the region, he said, shared a responsibility to maintain peace and stability.
“The world economy today is recovering slowly, and there are still some destabilizing factors and uncertainties,” President Hu Jintao told businessmen in a speech before the summit.
“The underlying impact of the international financial crisis is far from over.
“We will work to maintain the balance between keeping steady and robust growth, adjusting the economic structure and managing inflation expectations. We will boost domestic demand and maintain steady and robust growth as well as basic price stability.”
President Hu Jintao has promised to maintain economic growth to support a global recovery, at the start of APEC summit in Vladivostok
US Secretary of State Hillary Clinton has urged countries in the region to lift more barriers to free trade in the Pacific. American officials say they would welcome a more active Russian role in the region.
“Fostering a balanced and stable economy is a challenge too sweeping and complex for countries to approach in isolation,” Hillary Clinton said.
“If we do this right, globalization can become a race to the top, with rising standards of living and more broadly shared prosperity.”
Russian President Vladimir Putin, who is hosting the summit, has expressed concern about the world economy, and particularly Europe’s debt crisis.
“The recovery of the global economy is faltering. We can only overcome negative trends by enhancing the volume of trade… enhancing the flow of capital. It is important to follow the fundamental principles of open markets and free trade,” he said.
“The priority goal is to fight protectionism in all its forms. It is important to build bridges not walls.”
Meanwhile, Australian Prime Minister Julia Gillard said she was leaving the talks early to return home after her father died.