[ 18-03-2015 ]
Global Economy Expected To Continue Expanding At A Moderate Pace This Year
KUALA LUMPUR, March 11 (Bernama) -- The global economy is expected to continue expanding at a moderate pace this year, with increasing divergence in the growth momentum among the major economies.
BNM Annual Report 2014 released today said the global growth will be supported by gradual but uneven improvements in the advanced economies and sustained growth in most emerging economies.
"While growth in the US is projected to gather momentum amid higher private sector spending, the economic activities in the euro area and Japan will remain weighed down by structural weaknesses," it said.
The report also said in China, growth is projected to continue to moderate towards a more sustainable path, as policymakers continue to undertake structural reforms to rebalance the key drivers of the economy.
Nevertheless, it said, growth prospects in most emerging economies are expected to be sustained by the continued expansion in domestic demand and the gradual improvement in external demand, following the recovery in several advanced economies.
"The low global crude oil prices are also expected to provide additional lift to global growth.
"Lower inflation and higher disposable incomes will support higher consumer spending, while lower production costs could encourage further business investment in non-energy-related sectors, particularly in industries with already high capacity utilisation rates," it said.
However, the report said, there remain downside risks to the global growth outlook including the prolonged weakness in domestic demand and persistence of disinflation or even deflation in several major advanced economies.
These, it said, together with adverse geopolitical developments, could have spillovers on global trade activity, beside uncertainty over commodity price movements that could also affect the growth prospects of the commodity-producing emerging economies.
Last year, the global economy experienced uneven growth across and within regions, of which growth in the US continued to show broader signs of improvement while economic activity in the euro area and Japan remained subdued.
In Asia, the report said, most economies benefited from higher external demand, particularly from the US.
"Nevertheless, growth momentum diverged across the region as domestic demand moderated in several economies amid country-specific developments," it said.
Given these developments and the benign global inflationary pressures, the report said, the monetary policy remained accommodative across regions.
"Although there was some divergence in the direction of monetary policy across the major advanced economies amid the increasing unevenness in economic performances, the stance of monetary policy continued to be highly accommodative in all of these economies," it said.