NIESR forecasts world economy growth of 3.3 pct for 2013

LONDON, May 2 (Xinhua) -- Growth in the world economy was forecast as 3.3 percent for this year and 3.7 percent next year, according to a report issued Thursday by the National Institute for Economic and Social Research (NIESR).

Dawn Holland, head of macro-modeling at NIESR, told journalists at the launch of the Institute's Quarterly Review, "We are forecasting world growth of 3.3 percent, and 3.7 percent for next year which compares to a trend rate of about 4-4.25 percent."

Holland said this still remained below potential at the global level, and the world economy still had weaknesses "most noticeably in Europe, and the Euro area in particular."

Among the noticeable changes in the global forecast since the last forecast three months ago, is a revision upwards of expectations for the Japanese economy on the back of the stimulus package announced by the government of Japan.

"We are forecasting above-trend growth in Japan," said Holland.

She forecast 2-percent growth for each of 2013 and 2014 and she said the forecast before the stimulus measures were announced had been just 0.5 percent.

The United States was forecast to grow at about its trend rate of 2.25 percent, supported by a rebound in the housing market which had been somewhat offset by a fiscal tightening of about 1.75 percent of GDP this year, and 1 percent for next year.

The Euro area was predicted to slip back 0.4 percent in 2013, with just 0.9-percent GDP growth forecast for 2014.

Holland said, "We are forecasting contraction in output, but not in just the obvious candidates -- Italy, Greece, Portugal, and Spain -- but also in France, the Netherlands and Slovenia."

This reflects the weakness within the European economy, fiscal tightening measures and a slowdown in external demand, and also a high level of uncertainty, said Holland.

"China remains one of the strong points of the global economy but we are not expecting growth to exceed 8 percent this year or next year," said Holland.