IMF revises global growth for 2014 downwards. The IMF's latest World Economic Outlook (WEO) published on Tuesday 7 October confirms a disappointing and uneven recovery in the global economy. The IMF forecasts global growth to average 3.3 percent in 2014¯unchanged from 2013¯and to rise to 3.8 percent in 2015. The weaker than expected growth outlook for 2014 reflects setbacks to economic activity in the advanced economies during the first half of 2014, and a less optimistic outlook for several emerging market economies, says the report. Potential growth rates - that is, the pace at which annual output can expand without pushing up inflation - are also being revised down. Olivier Blanchard, economic counsellor and head of the IMF's Research Department, explained that two underlying forces weigh on global recovery. In advanced economies, the legacies of the pre-crisis boom and the subsequent recession, notably high debt burdens and unemployment, still cast a shadow on the recovery, and low potential growth ahead is a concern. Several emerging markets are also adjusting to lower potential growth. The IMF points out that across the globe investment has been weaker than expected for some time. As a result, global growth is still mediocre. At the same time, economic evolution is becoming more differentiated in major countries and regions, with the pace of recovery reflecting various country-specific conditions. Advanced economies. In the advanced economies, growth is forecast to rise to 1.8 percent in 2014 and 2.3 percent in 2015. Much of the projected strengthening in activity reflects faster growth in the United States (2.2% forecast in 2014 and 3.1% in 2015) following a temporary setback in the first quarter of this year. Employment growth has been strong, and household balance sheets have improved amid favourable financial conditions and a recovering housing market. In the euro area, recent growth disappointments highlight lingering fragilities. In Eurozone countries, the IMF forecasts growth of 0.8% in 2014 and 1.3%. A gradual, but weak recovery is projected to take hold, supported by a sharp compression in interest spreads for stressed economies and record-low long-term interest rates in core euro area economies. The IMF is forecasting growth of 1.4% in 2014 and 1.5% in 2015 for Germany and 0.4% and 1% respectively for France, -0.2% and 0.8% for Italy and between 1.3% and 1.7% for Spain. In Japan, GDP contracted more than expected in the second quarter of 2014 in the wake of an increase in the consumption tax. Looking ahead, private investment is forecast to recover and growth to remain broadly stable in 2015. Emerging economies. Growth in emerging market and developing economies will continue to account for the lion's share of global growth. Still, at 4.4 percent for 2014, the growth forecast is a bit weaker than in the April 2014 WEO. This slowdown is due to lacklustre domestic demand and the impact of increasing geopolitical tensions, especially on Russia and neighbouring countries. In China, growth is expected to decline slightly in 2014-15 to 7.4 percent, as the economy transitions to a more sustainable path. Growth is expected to remain strong elsewhere in emerging and developing Asia. In Latin America, the growth rate is forecast to decrease by half this year, to around 1.3 percent, due to declining exports as well as domestic constraints. Growth is expected to rebound to around 2.2 percent in 2015. In sub-Saharan Africa, stronger growth is expected because of supportive external demand conditions and strong investment demand, although prospects vary across countries. In the Middle East and North Africa, the recovery remains fragile even as growth is expected to start picking up modestly on the back of improving domestic security conditions and improving external demand. Similar considerations underpin modest improvements in activity in Russia and other economies of the Commonwealth of Independent States. (IL)