The World Bank believes 2014 will be a turning point in the global economic outlook, with advanced economies on the mend after a slow recovery from the 2008 financial crisis.
The bank’s Global Economics Prospects report says a good performance in developed economies will pull along emerging economies and China’s growth will remain strong, though not stellar.
It expects global growth to rise from 2.4 per cent in 2013 to 3.2 per cent this year and 3.4 per cent in 2015.
"It’s good news, because for the first time in five years we can say that this recovery is self-sustaining, unlike in the past two to three years where there has been growth in fits and starts and that growth was supported largely by government stimulus," said Allen Dennis, a senior economist with the World Bank.
In an interview with CBC's The Lang & O'Leary Exchange, he said the U.S. budget agreement has created more certainty and that is helping the private sector recover.
"We see that particularly in the labour markets where unemployment has dropped to 6.7 per cent from its highs of about 10 per cent in 2009. We also see continued recovery in the housing market," he added.
The S&P/TSX composite index gained 80.2 points to 13,772.58 on Wednesday amid optimism created by the World Bank report. The Dow was up 108 points to 16,481.
Growth prospects for 2014 are, however, sensitive to the tapering of monetary stimulus in the United States, which began earlier this month, and to the structural shifts taking place in China’s economy, the World Bank said. It did not look specifically at the Canadian economy.
"The fact that the global economy is picking up, doesn’t mean it’s booming," Dennis said. "For the high growth economies they’re going from a very low base to a somewhat moderate pace."
China has been an engine for the world economy in the past few years, but now the U.S. is stepping up to drive growth, he added.
But the World Bank sees few shocks ahead for the world economy.
"It's a strange world we live in that news that an uneventful economy ahead of us is meant to be good news," Kaushik Basu, the bank's chief economist, said at a news conference at the bank's Washington headquarters. He added, "but not surprising" that this is the case after years of economic turmoil.
The Federal Reserve decision to begin trimming its unprecedented $85 billion a month U.S. bond buying program is welcome, the bank said. But it cautioned the move to higher rates must be done gradually.
The US economy is projected to grow by 2.8 percent this up from 1.8 percent in 2013. The Euro area will grow more slowly at about 1.1 per cent, but is vulnerable to the bank restructuring process as well as currency shock.