United Nations Conference on Trade and Development – Geneva – October 2014.

“The world economy has not yet escaped the growth doldrums in which it has been marooned for the past four years, and there is a growing danger that this state of affairs is becoming accepted as the “new normal”. Policymakers everywhere, but particularly in the systemically important economies, need to assess current approaches and pay closer attention to signs of inclement economic weather ahead. Growth in the world economy has been experiencing a modest improvement in 2014, although it is set to remain significantly below its pre-crisis highs. Its growth rate of 2.3 per cent in 2012 and 2013 is projected to increase moderately to between 2.5 and 3 per cent in 2014. This improvement is essentially due to growth in developed countries accelerating from 1.3 per cent in 2013 to around 1.8 per cent in 2014. Developing countries as a whole are likely to repeat their performance of the previous years, growing at between 4.5 and 5 per cent, while in the transition economies growth is forecast to further decelerate to around 1 per cent, from an already weak performance in 2013. The moderate growth acceleration expected in developed countries should result from a slight pick-up in the European Union (EU), where a tentative easing of fiscal austerity and a more accommodating monetary policy stance, notably by the European Central Bank (ECB), has helped pull demand growth back to positive territory. In some countries (e.g. the United Kingdom), household demand is being supported by asset appreciation and the recovery of consumer and mortgage credit, and in others by some improvement in real wages (e.g. Germany). However, in a number of other large euro-zone economies (e.g. France, Italy and Spain) high levels of unemployment, stagnant or sluggish real wage growth, and persistent weakness in the banking sector continue to hinder the expansion of domestic credit and demand. In the United States, the economy is continuing its tentative recovery through a reliance on domestic private demand. The negative impact of fiscal austerity eased slightly in 2014, the unemployment rate has continued to fall, and asset price appreciations are encouraging the recovery of domestic borrowing and consumption. However, average real wages remain stagnant. Growth in Japan has also been relying on domestic demand, as private consumption and investment benefited from the expansionary monetary and fiscal policies of Abenomics. The effects of public spending for reconstruction following the 2011 earthquake, which helped propel the Japanese economy to higher growth in 2012−2013 have dissipated, while recent tax increases could hurt consumer spending, so that further stimulus packages may be needed to maintain positive growth and price targets.”