ANCHOR OF ECONOMIC

AND FINANCIAL STABILITY

THE ECONOMY
UNEVEN RECOVERY IN THE GLOBAL ECONOMY

The global economy expanded at a slightly stronger pace of 4.1% in 2014, compared to 3.9% in the preceding year. However, growth was uneven across the major economies. While the United States (US) emerged from a weather-related contraction in Q1 to register robust expansion for the rest of the year, activity in the Eurozone and Japan was subdued and only picked up in the last quarter. In Asia ex-Japan, firm domestic demand helped to support most economies in the region and cushion the impact of slower export growth.

With signs of a broad-based recovery taking hold, underpinned by strong employment, the US Federal Reserve ended its quantitative easing (QE) programme in October 2014 and signalled its intention to normalise interest rates sooner. In contrast, subdued growth and inflation—the latter due mainly to the fall in oil prices—spurred the Eurozone and Japan to implement their most aggressive monetary easing to date. The European Central Bank (ECB) began targeted longer-term refinancing operations in September 2014 and full-fledged QE in March 2015, while the Bank of Japan embarked on a second round of QE in October 2014.