Economists have nudged up growth forecasts for the United States and Japan but the euro zone and Britain will not fare quite as well as previously expected, the latest Reuters poll of nearly 300 analysts found.
As the rich world's economies emerge from their deepest post-war recessions, persistently high unemployment will remain a concern for governments.
Governments and central banks have pumped billions of dollars into programmes designed to kickstart their battered economies, but the cost of these recovery packages has created a financial headache.
"The need for European governments to face up to their fiscal hangovers is likely to mean growth disappoints over the medium term," said Azad Zangana at Schroders.
The 16-nation euro zone's economy is expected to grow 1.0 percent this year and 1.5 percent next while across the channel Britain is on a similar path with forecasted 1.1 percent growth this year and 2.3 percent in 2011.
The bloc and Britain have both seen their currencies hammered on fears about sovereign indebtedness, while fears that an upcoming election may give no party a clear majority to deal with Britain's vast budget deficit also weighed on sterling.
Things look rosier for Japan, whose economy is seen growing 1.9 percent in the fiscal year to next March on solid exports, and the United States, where gross domestic product (GDP) is predicted to grow 3.0 percent on average in 2010.
But even these seem sluggish when compared to economic powerhouse China, the world's third-largest economy.
China is seen growing faster in 2010 and 2011 than previously forecast thanks to a better-than-expected global recovery and strong investment momentum at home, with economists predicting a whopping 10 percent growth this year and 9.2 percent next.
Southeast Asian economies should post brisk growth this year and next as the global economy recovers, attracting strong capital inflows but also the risk of sudden reversals in investment.
UNEMPLOYMENT UP
Rising unemployment levels, which have yet to peak as firms continue to slash jobs in a bid to cut costs and drive up profitability, will not help the muted growth forecasts.
The rate in the euro zone is expected to peak at 10.4 percent later this year, above the near 12-year high of 10.0 percent in February.
The jobless rate in the U.S. — 9.7 percent in March — has eased only moderately from a 26-1/2-year high above 10 percent, and economists expect it to remain above 9 percent through to at least October 2011.
"GDP growth is likely to be relatively strong in the near term but not enough to push the unemployment rate down," said Scott Brown, chief economist at Raymond James & Associates.
The sedate growth forecasts for the rich world's economies will convince central banks to leave interest rates at their record lows for some time yet.
The U.S. Federal Reserve and Bank of England will not budge until the fourth quarter while the European Central Bank will wait until early next year before raising the benchmark rate from its record low of 1.0 percent.
The Bank of Japan, which is facing persistent deflation, is not seen moving rates from just 0.1 percent until at least 2012.
"Deflation will persist for a long time … The BOJ cannot escape from government pressures to do more to beat deflation," said Junko Nishioka, chief Japan economist at RBS Securities. Inflation in the euro zone is seen at 1.3 percent this year, well below the ECB's two percent target ceiling.
A crisis in Greece has called the euro zone's unity and credibility into question but economists gave just a five percent median chance that a member country would leave the bloc in the next five years.
