U.S. is a bright spot in slowing global economy
The International Monetary Fund has revised downward its global economic projections. The IMF predicts China will grow 6.8 percent in 2015 (the October 2014 estimate was more than 7 percent, compared to growth topping 10 percent in recent years) as it tries to deflate an investment bubble. The eurozone is projected to grow 1.2 percent. Japan is expected to grow just 0.6 percent.
The United States is the bright spot in this forecast. The IMF now predicts higher growth for the U.S. than it did in October – 3.6 percent in 2015. The U.S. economy is benefiting from declining oil prices and low inflation. Plus, says Paul Ashworth at Capital Economics in Toronto, the U.S. is relatively insulated from troubles in Europe, Asia and other developing countries because of its size and its relatively low dependence on exports.
“Exports are a fairly small part – 11 to 12 percent – of U.S. GDP,” says Ashworth. “And within that, the U.S. main trading partners are Canada and Mexico, which have actually been doing quite well.”
Overall, the IMF expects global growth of 3.5 percent this year.
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