EIU trims global growth forecast for 2014 to 2.5% as emerging markets struggle

LONDON – After arguing for many months that 2014 would be a transformative year for the global economy, The Economist Intelligence Unit has reduced its global growth forecast for 2014 to 2.5% in the face of political crises and contraction in the US economy in the first quarter. In its latest Global Outlook Report, the EIU says it is nevertheless still of the opinion that the US economy is performing well, Europe is mending and that Japan will benefit from a reform programme.

The improving tone in the advanced economies is not being mirrored in most emerging markets, the EIU says. China should still grow by more than 7% but activity remains relatively soft as the Government restricts credit expansion.

It expects growth of just 0.5% in Russia and 6% in India, but Brazil may have a dismal year. The EIU has cut its 2014 GDP forecast there from 1.8% to 1%.

It says it has expected the US to expand in 2014 by around 3% but has now lowered its 2014 forecast to just 1.7%. Momentum in the Eurozone remains “uneven and vulnerable”, but the EIU has lifted its forecast for Japan to 2.1% GDP growth in 2014.

Asia, it says, is still expected to power the global economy in 2014, but the soft patch in China in the early months of the year has cast a shadow. www.eiu.com (ATI).