U.S. economist forecasts subdued outlook for global economy

A U.S. economist at the Peterson Institute for International Economics forecast a more subdued outlook for the global economy on Friday, including favorable outlook for the United States and Britain and cautious optimism for China.

The euro area economies face risks of slower growth and stubbornly high unemployment. Also, prospects for numerous emerging markets have continued to darken, according to the Institute's outlook team led by senior fellow David Stockton, who was chief economist for the Federal Reserve Board from 2000 to 2011, before joining Peterson.

Stockton forecast the pace of U.S. activity would pick up to better than 3 percent in the second half of the year and would sustain an expansion of 2.9 percent in 2015 due to the improving financial conditions of U.S. households.

However, the U.S. economy could be hurt by weak economic performance abroad, as well as a stronger dollar and less monetary accommodation from the Federal Reserve, he said.

Stockton anticipated slower pace of tightening than of the Federal Reserve, although he expected the Federal Reserve to begin raising interest rates in the middle of next year.

He forecast 3.1 percent solid growth in Britain in 2014 while for the euro area, a disappointing 0.6 percent growth this year with a modest 1.1 percent growth rate in 2015 and 1.5 percent in 2016.

Stockton also predicted that China's economic growth will gradually slow to the rate of 7.3 percent in 2014 and 7.1 percent in 2015 mainly due to weakening property markets.