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IMF raises economic growth forecasts for globe, U.S.

Germany, the biggest economy in Europe, will grow

Germany, the biggest economy in Europe, will grow 1.6 percent this year, up from 0.5 percent growth in 2013, the IMF forecasts. (Jan. 20, 2014) Credit: Bloomberg

The International Monetary Fund is slightly more optimistic about the global and U.S. economies this year than it was three months ago.

In an updated outlook released Tuesday, the global lending organization forecasts that the world economy will grow 3.7 percent in 2014 and that the U.S. economy will grow 2.8 percent. The global forecast is 0.1 percentage point higher and the U.S. forecast 0.2 point higher than the IMF October forecasts.

After a sluggish start, global economic growth picked up in the second half of 2013. As a result, growth amounted to 3 percent last year. The IMF expects there will be even stronger growth this year.

"The recovery is indeed strengthening, but as we have said many times in the past, much work remains to be done," IMF chief economist Olivier Blanchard said Tuesday during a conference call.

The IMF forecasts that the U.S. economy grew 1.9 percent last year. And its 2.8 percent forecast for this year would match U.S. growth in 2012. Part of the anticipated improvement is based on expectations for less drag from higher U.S. taxes and across-the-board spending cuts.

By 2015, the IMF forecast, the U.S. economy will grow 3 percent, or 0.4 percentage point lower than its October forecast. The IMF reduced its outlook because a recent budget agreement left in place most of the spending cuts. The IMF had expected most of those cuts to have been eliminated by next year. -- AP

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