Global economic growth is expected to accelerate in 2014 and 2015, driven by a stronger recovery in the world’s advanced economies, says Fitch Ratings in a new report.

In its latest global economic outlook report, the rating agency forecasts that GDP growth will gain momentum over the next couple of years due to a more robust recovery in major advanced economies, while emerging market (EM) growth rates are only expected to improve modestly. Fitch forecasts world GDP growth at 2.3% in 2013, rising to 2.9% in 2014, and 3.2% in 2015.

“Although [the] latest trends support our base case that a stronger global expansion is gradually taking hold, several risks lie ahead, including the impact of Fed tapering, EM growth stresses, fresh setbacks in the eurozone and the risk of deflation,” says Gergely Kiss, director in Fitch’s sovereign team.

Third quarter economic data contained some positive growth surprises in the advanced economies, Fitch says. It notes that the U.S. and UK registered their strongest growth this year. And it expects U.S. growth to strengthen further, rising from 1.7% in 2013 to 2.6% in 2014 and 3.0% in 2015, “underpinned by the housing market, rising employment and strong corporate profitability.” The report doesn’t include a specific forecast for Canada.

“The main downside risks to growth are a renewed fiscal squeeze or dent in confidence from brinkmanship over the budget and debt ceiling, global shocks or a sharp rise in long-term U.S. Treasury bond yields,” it says.

The rating agency says that it expects the U.S. Federal Reserve Board to start ‘tapering’ its monthly asset purchases sometime in the first quarter of 2014, depending on economic data. “The exact timing is not critical for the growth forecasts,” it says, adding that it does not expect the first increase in interest rates until mid-2015, which is contingent on a more vigorous recovery and a further decline in the unemployment rate.

Fitch notes that underlying inflationary pressures have declined notably over the past quarter in most advanced countries. “The low inflation environment should make it easier for the major central banks to manage expectations and prioritise growth considerations in designing their exits from current ultra-loose monetary policy settings,” it says. “Nevertheless, the timing and impact of the process remain uncertain, and tighter and more volatile global monetary conditions are a key risk for many EMs, especially those that are dependent on capital inflows.”

In Europe, following a contraction of 0.4% in 2013, Fitch forecasts GDP growth of 0.9% in 2014 and 1.3% in 2015 “due to a more positive contribution from domestic demand components, supported by the declining drag from fiscal consolidation in most member states, better financing conditions and a gradual improvement in private sector balance sheets.”

For Japan, it forecasts growth of 1.8% in 2013, moderating to 1.5% in 2014, and 1.2% in 2015.

Fitch also says it expects emerging market growth to improve only modestly from 4.6% in 2013 to 4.8% in 2014 and 5% in 2015. “To varying extents, major EM economies face headwinds from tighter global funding conditions, lower non-energy commodity prices, and idiosyncratic structural weaknesses including persistent political risks,” it notes.