The International Monetary Fund Tuesday raised its global economic growth outlook for the year, with expansion fueled by stronger U.S., euro zone and Japanese growth, but said deflation and financial sector risks still threaten a full recovery.
“The recovery is strengthening,” IMF Chief Economist Olivier Blanchard said as the fund published its latest World Economic Outlook report, but it is still “weak and uneven.”
The IMF raised its 2014 global growth forecast to 3.7%, up 0.1 percentage point from its last outlook in October.
The U.S. leads the recovery. The IMF raised its forecast for U.S. economic growth this year by 0.2 percentage point to 2.8%, though it downgraded its 2015 outlook by 0.4 percentage point to 3% amid ongoing fights in Congress over the federal balance sheet and spending.
The fund said the Federal Reserve’s plans to exit its easy money policies are broadly appropriate, and it expects an increase in the Fed’s policy rate in 2015.
In Japan, the IMF raised its growth forecast for the year by 0.4 percentage point to 1.7%. It said Japan’s government will continue to face the challenge of trimming its budget enough to reassure investors while not slowing the recovery.
The fund also raised the growth forecast for the world’s second largest economy, China, by 0.3 percentage point to 7.5