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Concerns over Greece and slowdown in emerging markets make for tepid global growth

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Concerns over Greece and slowdown in emerging markets make for tepid global growth

According to The Conference Board Canada, the world economy is forecast to expand by a tepid 2.5 per cent this year.

Due to ongoing turbulence, the global economy is forecast to expand by a tepid 2.5% this year. But a rebound in the US and better economic conditions in much of Europe point to better growth ahead, according economists at The Conference Board of Canada.

"Much attention has been paid to the ongoing Greek financial drama, but there are some positive developments in the global economy," said Glen Hodgson, Senior Vice-President and Chief Economist, The Conference Board of Canada. "Economic conditions in Europe, outside of Greece, are improving thanks to the weaker euro and drop in oil prices. This, combined with a positive outlook for the US, should help the global economy strengthen over the next two years." 

The Asia-Pacific region continues to lead the world in growth.

Overall, economic growth is picking up in the eurozone. Real GDP in the region is expected to expand by 1.5% this year and 1.8% in 2016, an improvement over the contractions seen in 2012-13. Economic growth in the region would be higher if the German economy was not struggling. Real GDP in Germany is expected to increase by less than 2% this year.

The Greek government's decision to accept the austerity measures and reforms demanded by the EU has lessened some of the worries concerning an exit from the eurozone for now. However, Greece's long-term membership in the currency union is by no means assured, and renewed slippage in Greece's adjustment policies would have renewed repercussions for the world economy.

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