Europe continues to drag world economy

With much of the eurozone still mired in recession, the global economy will expand at a tepid pace of 2.5 percent this year, according to a report released by a Canadian think tank. According to the quarterly report published by the Conference Board of Canada, the global economy is expected to grow 3.2 percent in 2014 as the U.S. economy picks up steam toward the end of 2013. "Now that the U.S. economy is heading in the right direction, Europe remains the main stumbling block to higher growth in the world economy," said Kip Beckman, principal economist of the think tank. "The latter region continues to be plagued by record high unemployment rates, a fragile banking sector and a high level of government debt," he added. The report said that many banks in Europe remain undercapitalized and highly leveraged, and some have been operating with huge losses, noting that another credit crisis in the eurozone can't be ruled out if the EU fails to address this issue. In addition, continued labor market rigidity and a high degree of regulation will limit growth prospects in Europe, said the report. Real GDP in the eurozone is expected to drop by 0.5 percent in 2013, and a gain of only 1.1 percent is forecast for 2014. The Asia-Pacific region will continue to lead the global economy with a4.7-percent real GDP growth this year and close to 5 percent in 2014, it said, adding China's economic growth will slow to 7.9 percent this year, down from an annual average of almost 10 percent from 2009 to 2011.