By Isaac Cohen*
In Mexico City, last week, the Economic Counselor of the International Monetary Fund Olivier Blanchard presented an update of the World Economic Outlook, issued last April.
The presentation started recognizing the weakness of the world economic recovery, which looks even weaker as a result of the downward revision of the projected rate of world economic growth. In 2014, the Fund estimates the world economy will grow 3.4 percent, instead of 3.7 percent projected in April.
This downward revision was due mainly to the winter fall in US economic growth and the declining trend in the growth of emerging markets.
Looking ahead, for the rest of 2014 and next year, the projection is that US economic growth will regain strength at an estimated yearly rate of 3 percent. Additionally, the projection for emerging market and developing economies is a downward revision to still relatively vigorous growth rates of 4.6 percent in 2014 and 5.2 percent in 2015.
The main challenge confronting the world economy comes from the monetary policy side, which Mr. Blanchard described as the speed of monetary policy normalization in the United States. The normalization consists of the end of asset purchases by the central bank, already announced it will conclude next October. Also, the normalization includes increases in interest rates, which Mr. Blanchard estimated could start sometime in the middle of next year.
*International analyst and consultant. Commentator on economic and financial issues for CNN en Español TV and radio. Former Director, UNECLAC.