The British and American economies are in ‘robust’ shape but the global recovery remains ‘disappointing and uneven’, according to the International Monetary Fund.
Christine Lagarde managing director of the Washington institution, hailed the performance of the UK and the US.
But she said forecasts for global growth will be cut next week ahead of the fund’s annual meetings with the World Bank in Peru.
The comments came as official figures showed Britain was the best performing economy among the Group of Seven nations in both 2013 and 2014.
But separate figures from the eurozone showed it was back in deflation – with prices falling 0.1 per cent in Sept-ember – and unem-ployment stubbornly high at 11 per cent.
‘On the economic front, there is reason to be concerned,’ said Lagarde.
‘The prospect of rising interest rates in the US and China’s slow-down are contributing to uncert-ainty and higher market volatility.
There has been a sharp deceler-ation in the growth of global trade. And the rapid drop in com-modity prices is posing problems for resource-based economies.’
Highlighting that 200m people are unemployed worldwide, she warned that ‘global growth will be weaker this year than last’.
As recently as July, the IMF forecast growth to slip from 3.4 per cent last year to 3.3 per cent this year before picking up to 3.8 per cent next year. Those predictions now look overly optimistic.
‘The good news is that we are seeing a modest pick-up in advanced economies,’ said Lagarde. ‘The moderate recovery is strengthening in the euro area, Japan is returning to positive growth, and activity remains robust in the US and the UK.
‘The not-so-good news is that emerging economies are likely to see their fifth consecutive year of declining rates of growth.’
In the UK, the Office for National Statistics confirmed output rose by 0.7 per cent in the second quarter of the year.
But revisions to past data showed the recession was even deeper than feared and the recovery faster, with output now 5.9 per cent higher than the pre-downturn peak.