Despite setbacks, an uneven global recovery continues. Largely due
to weaker-than-expected global activity in the first half of 2014, the
growth forecast for the world economy has been revised downward to 3.3
percent for this year, 0.4 percentage point lower than in the April 2014
World Economic Outlook (WEO). The global growth projection for 2015 was
lowered to 3.8 percent.
Downside risks have increased since the spring. Shortterm risks
include a worsening of geopolitical tensions and a reversal of recent risk
spread and volatility compression in financial markets. Medium-term risks
include stagnation and low potential growth in advanced economies and a
decline in potential growth in emerging markets.
Given these increased risks, raising actual and potential growth
must remain a priority. In advanced economies, this will require continued
support from monetary policy and fiscal adjustment attuned in pace and
composition to supporting both the recovery and longterm growth. In a number
of economies, an increase in public infrastructure investment can also
provide support to demand in the short term and help boost potential output
in the medium term. In emerging markets, the scope for macroeconomic
policies to support growth if needed varies across countries and regions,
but space is limited in countries with external vulnerabilities. And in
advanced economies as well as emerging market and developing economies,
there is a general, urgent need for structural reforms to strengthen growth
potential or make growth more sustainable.