Global economy is certainly developing as we google earth the various cities from its infant years to the contemporary years. Yet, the world has slowly but surely turned into a numbers game and the numbers are not glorifying the progressive results. In dissecting the numbers announced by the IMF in its October 2013 issue of the World Economic Outlook, a biannual report of the state of the global economy, we must accept the fact that the global economy is in a transition phase. 

According to the IMF, the global growth has taken a beating with forecasts being trimmed down from 3.2% to 2.9% for this year. However, the growth forecasts will pick up to reach 3.6% in 2014, with the advanced economies leading the way. A number of factors are responsible to shape this outlook. While the US economy has shown some resilience, especially in the housing market, the critical adjustments in the monetary policy could rekindle volatile conditions around the world. On the other side of the Atlantic, though some new lease of life seems to be appearing, the IMF has declared that “this is the result not of recent major policy changes but of a change in mood.”

Emerging markets, the drivers of global economy during duress, have had their growth forecasts revised down by 0.5% to 4.5% in 2013. The fastest growing economy of the world, China, still looks relatively solid at 7.6%, but with its drop from double-digit highs, the global economy will be affected in the form of lower import demand and commodity prices. In the watchful eyes of the IMF, China and growing number of emerging economies are coming off cyclical peaks and with the progression of time, policy spillovers may pose greater risks, particularly with the upcoming decision by the US Federal Reserve to slow the pace of asset purchases.

The IMF has identified the US as the imperative cog to global growth. But, with the report forecasting a shrinking of the growth figures to 0.75%, the economy will need to establish strong fiscal measures to withdraw the check on the growth rate and propel the US economy forward. Yet again, the US is at the helm of the global affairs with any changes having snowball influence in the other lesser affluent economies. A transition phase, such as the impeding one, is an epoch in the history of mankind which could go either way but we hope the sun will rise once again to mark the dawn of an economical progression in the years to come.