The World Bank's top economist says Europe's banks and slowing growth in emerging economies are key dangers to the recovering global economy.
Dr Kaushik Basu was in New Zealand as a guest of the Treasury last week.
Dr Basu says the pick up is small but visible in America but Europe remains fragile, particularly among its banks, which have to pay back a total of more than $US1 trillion in loans next year.
He says better banking supervision and resolution mechanisms are needed.
Dr Basu says Europe needs better fiscal co-ordination and it is a monetary union without being a fiscal union.
"We've realised what those faultlines are which is a great achievement but there are still big steps to be taken and my own calculation is that the entire 2014 is going to be a difficult year."
Dr Basu says that is because European banks will have to repay the loans given under the Longer-Term Refinancing Operations (LTRO) scheme by early 2015.
He says nations like India and China are also under pressure, which could threaten the recovery.
Dr Basu says Brazil's growth has slowed a lot and India's growth has slowed down to about 5% and its currency is depreciating very rapidly.
He says China's growth is more than 7% but it needs to make corrections on its finance and credit sector.
Dr Basu says making corrections to the financial sector can have an impact on the real sector.
He says China and India have great strengths, but both countries have risks in the short term.
Dr Basu says if growth slows down in China and India the impact will be felt in Europe and sub-Saharan Africa, which has strong connections with China.