The Global Economy

October 19, 2014

By: Gianluca Lulli

U.S. unemployment rate fell to 5.9% thanks to job growth of 248,000 (nonfarm) in September. And although this recovery of the job-market since the “Great Recession” that began in 2008 may seem slow, that’s because it has been. But, this has also been the steadiest in U.S. history. As many investors around the globe may see the U.S.’s recovery as a positive sign to the world economy, the IMF World Economic Outlook tells a different story for the state of the global economy.

Although the world is recovering slowly, this recovery has been an uneven one. The International Monetary Fund (IMF), in the April 2014 World Economic Outlook (WEO), forecasted the world economy to grow at 3.7% but revised the number to 3.3%. This was, in major part, a result of weaker-thank-expected global activity in the first six months of the year.

There have been a number of increased risks. Some of these are short-term, such as a worsening geopolitical tensions in different part of the world, and medium-term risks, such as stagnation of growth in mature economies as well as a slowing rate of growth in emerging ones.

According to the IMF, in order to combat these risks and not let them slow down economic growth any further, advanced nations will need continued support from monetary and monetary policies. For emerging economies, on the other hand, the process is a bit more complicated, involving structural reforms; thus making it easier to strengthen growth.

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