The growth prospects for the global economy remain weak, but downside risks have diminished, too, says Moody’s Investors Service in a new report.

The rating agency suggests that 2014 will turn out to be another below-average year for global growth, and that real improvement is not likely to be visible until 2015. For the G20 economies, gross domestic product (GDP) growth is forecast at around 2.8% in 2014, Moody’s says, which is broadly unchanged from 2013. Growth is then seen rising to 3.2% in 2015.

In the United States, Moody’s forecasts that growth will accelerate to 3% in 2015, after only reaching 2% in 2014. “However, there is a material risk the economy’s medium-term potential is overestimated given the lacklustre growth the U.S. economy has recorded during the past five years, despite favourable conditions being in place for some time,” it cautions. In that case, Moody’s also says that this could lead to a “destabilizing correction in financial markets” as investors gradually reassess potential returns on U.S. assets.

Canada and Mexico would likely be most affected by slower growth in the U.S., Moody’s says. It notes that growth in Canada has been resilient to U.S. weakness so far; but that it has affected Mexico.

For Europe, Moody’s says that the contrast between robust growth in the United Kingdom over the past year, and very low growth in the euro area, “is stark and will be sustained throughout this year and next”. Moody’s has revised its UK forecast upwards, but its forecast for the euro area is broadly unchanged at around 1% in 2014 and 1.5% in 2015. “Prolonged low growth in the euro area poses a risk that low inflation could become entrenched, with deleveraging increasingly economically and politically painful,” it says.

Additionally, Moody’s has revised its growth forecasts for a number of emerging markets down once again. It says that central banks have raised interest rates in several of these countries in response to high inflation, which will weigh on growth. “Moreover, export growth will probably be relatively low for some time given that demand from China, a key export destination for many emerging markets, is unlikely to bounce back in the near future, inflation is expected to remain high and production bottlenecks are only slowly being addressed,” it says.

Amid this generally weak outlook, Moody’s says that while there are downside risks for specific countries, “there are relatively few sources of risk that would significantly affect the global outlook”.

Among the macro downside risks that do exist, it suggests, that a sharper than expected slowdown in China would affect the global economy. “A simultaneous correction in a number of financial markets that would trigger negative wealth effects and raise the cost of finance globally is an additional source of risk to the global economy,” it warns. “However, only a sharp, prolonged and widespread market correction, with sizable losses for banks, would have a significant impact on global growth.”