The Economist Intelligence Unit (EIU), sister company of The Economist, reported that the world economy will improve by 2.9% in 2015. In comparison to the 2.5% growth in 2014, the 4% increase is due to global growth like lower oil prices. A 10% fall can already add about 0.2% to the world gross domestic product (GDP).
According to EIU, the United States will be the best-performing rich-world economy with its growth forecast at 3.3%. Weakness in Japan and the Euro area might hold the world economy back, however.
Reviving the United States
The US is ready to drive global growth this 2015 after struggling its way out of the Great Recession. The world’s biggest economy, along with its ongoing winning streak, is almost near full recovery. The US financial system nearly went under six years ago, so the country is expected to grow at its fastest pace in the decade. From July to September 2014, its 5% annual was the fastest in any quarter since 2003.
The National Association for Business Economics (NABE) noted that the pace might slow down, but it’s still undeniable that the expansion will continue around 3.1%. It’ll be the first higher than 3% growth for a long time since 2005. According to JPMorgan Chase and IHS Global Insight, the recent rapid growth in the US is one of the reasons the global economy is improving faster than ever.
A good example is lower oil prices, as Americans can now buy gasoline at $2 gallon. The U.S. Energy Information Administration says that this allows an average household to save up to $550.
Chief economist at BMO Capital Markets, Douglas Porter, says that an increase in global growth “is highly dependent on the assumption that the U.S. economy continues to improve.” He added, “If that doesn’t play out, there’s not much left for the global economy to fall back on.”
Global Economy Growth
The Economist noted that Asia, excluding Japan, and Australasia will be the fastest-growing region in the world this 2015. Papua New Guinea is predicted to be the liveliest economy of the year because it’s expanding faster than any other country with 15% growth.
Unfortunately, Russia’s economy will suffer further because of Western sanctions and declining oil revenues. The fall of gambling revenues will also cause Macau’s GDP to shrink. The worst performing country will be Sierra Leone because of the Ebola virus outbreak in the western part of Africa.