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Global GDP growth to moderate to 3.3 pct in 2015: think tank

Xinhua, February 10, 2015 Adjust font size:

Britain's National Institute of Economic and Social Research (NIESR) Tuesday announced that the global GDP growth in 2015 would be 3.3 percent, slightly lower than the 2014's 3.4 percent, as the economic expansion engine is cooling down.

The British economic think tank also expects that the world's GDP will expand at 3.6 percent in 2016. Both years' growth expectations are lower than its previous estimation of 3.5 percent and 3.8 percent, data showed.

NIESR said in its quarterly report that growth in the second half of 2014 has generally been weaker than expected, with the exception of the United States. And as oil prices have declined by more than a half in the U.S. dollar terms since June 2014, oil exporting countries will suffer and some could face financial stress.

However, the oil price slump should be beneficial for the world as a whole, though this will depend partly on the extent to which it has a prolonged downward effect on inflation, stressed NIESR.

In its report, NIESR expects that the U.S. GDP will expand at 3.2 percent and 2.9 percent in 2015 and 2016, higher than its previous estimations. Euro area will grow at 1.4 percent and 1.9 percent over the same period; China will grow at 7.0 percent and 6.9 percent; Japan with 0.8 percent and 1.1 percent expansion.

NIESR noted: "Continuing tepid expansion in the advanced economies in spite of the fall in oil prices, combined with substantial economic slack and low and declining rates of inflation, points to the continuing importance of promoting growth by boosting demand."

It suggests "structure reform" to boost demand as well as supply. Reforming measures include remove impediments to investment, business formation, and job creation and reforms that promote investment by raising expectations of future growth.

Meanwhile, "there is substantial potential for increased government investment, financed by borrowing, to boost both demand and potential output in many if not most advanced economies," it said. Enditem