IMF Confident of World Growth as US Picks up

The International Monetary Fund will raise its forecast for world growth, Managing Director Christine Lagarde said, underscoring confidence in the global recovery as the outlook for the U.S. improves.

A faster-than-expected expansion in the world economy contrasts with the outlook in October, when the IMF lowered its expectation for the pace of expansion for 2014. Lagarde said in December the fund sees “a lot more certainty” for the U.S. economy this year.

The U.S. jobless rate, which fell to 7 percent in November from 7.3 percent in October, will keep declining as confidence increases that the economy is on a sustainable growth path, she said last month. The IMF currently forecasts global expansion of 3.6 percent this year.

Asian stocks climbed on 7 January for the first time this year. The Federal Reserve said Dec. 18 that it plans to trim its monthly bond purchases to $75 billion from $85 billion starting in January, taking the first step toward unwinding the unprecedented stimulus put in place by Chairman Ben S. Bernanke.

There may be knock-on effects for emerging nations as the recovery in advanced economies raises the threat of financial market turbulence, Lagarde said in a Jan. 6 speech to business leaders in Nairobi.

“As financial conditions in advanced economies normalize, the risk of heightened volatility in financial markets may create new challenges in emerging market economies,” Lagarde said.