In April, the IMF had predicted that global output would grow by 3.6% in 2014 and 3.9% in 2015.

Confidence is improving and financial markets are upbeat, perhaps a little too upbeat.







At an event in the Robert Schuman Foundation in Paris, IMF head Christine Lagarde said that Europe continues to face important challenges concerning its long-term future and markets might be at risk of being too complacent. She said,"The good news is that the European economy is recovering from the crisis. Confidence is improving and financial markets are upbeat. Perhaps too upbeat."She has warned that financial markets maybe a little too upbeat given the persistently high levels of unemployment and debt in European economies. She added that growth prospects in the region could be undermined due to continuing low inflation. Currently the inflation in eurozone is 0.5%.On the other hand, she was optimistic that European economy was recovering and until demand starts to rise, interest rates should remain low. European Central Bank prefers inflation close to 2%. Being optimistic she said,"Confidence is improving and financial markets are upbeat, perhaps a little too upbeat."The European Central Bank cut its main interest rate to 0.15% last month. ECB chief Mario Draghi has since said interest rates will remain at their current level for an "extended period of time in view of the current outlook for inflation".While ECB has become the first major central bank to introduce negative rates.It also cut its deposit rate - the rate it pays banks to keep money on deposit - to -0.1%Lagarde said,"Monetary policy should remain supportive until private demand has fully recovered" and the ECB "has achieved its price stability objective." She added,"There is a danger of a vicious cycle - persistently high unemployment and high debt-to-GDP ratios jeopardize investment and lower future growth.""Global activity is picking up but the momentum could be less strong than we had expected because potential growth is weaker and investment ... remains subdued," she told.She said,"Looking at emerging Asian countries, and in particular China, we are reassured because we do not see a brutal slowdown but rather a slight slowing of a growth that has become ... more sustainable and that we see at 7-7.5% this year."In April, the IMF had predicted that global output would grow by 3.6% in 2014 and 3.9% in 2015. The information of IMF slashing US economic growth rate is there in the market. IMF slashes estimate for US economic growth in 2014, the annual review cut its growth forecast to 2%, citing a harsh winter, weak international demand for the country's products and problems in housing market.After the financial crash of 2008, many nations across the globe have to restructure and re-balance their economies. While others were recovering substantial sovereign and bank debt led the euro zone to fall back into recession in 2011. In the summer of 2013, eurozone economy managed to expand again, but has failed to build on that with growth of just 0.2 percent in the last quarter compared to the previous period."More developed and diversified regional capital markets can support innovation, investment, and long-term growth," Lagarde said. "Deeper integration with world markets would improve productivity and plug countries into global supply chains."