Regional developments and outlook

The developed market economies are expected to gradually strengthen over the forecast period, with growth of gross domestic product (GDP) projected to be 2.1 and 2.3 per cent in 2015 and 2016, respectively, up from the estimated 1.6 per cent in 2014 (see annex table A.1). There is an increasing divergence of performance within the group. The United States of America, Canada and the United Kingdom of Great Britain and Northern Ireland are experiencing a period of relatively strong growth, while growth is much weaker and more at risk in the economies of the euro area and Japan. Inflation rates reflect this varying performance: Japan continues to struggle to end its deflationary past and push inflation towards its 2 per cent target while the euro area increasingly flirts with entering deflation. Policy stances also reflect this divergence. The euro area and Japan continue to strengthen highly accommodative monetary policies, while the United States and the United Kingdom contemplate the beginning of policy normalization, bringing policy to a more neutral stance. This policy divergence was reflected in strong currency movements in the latter half of 2014, which are expected to continue in the forecast period.

Related Subject(s): Economic and Social Development