The International Monetary Fund (IMF) has lowered its economic growth forecasts for the US to 2.1 per cent for this year and the next, down from the 2.3 per cent for 2017 and 2.5 per cent for 2018 that it had predicted in April, the media reported. The global financial institution cited the “uncertainty” over President Donald Trump’s administration policies as the main reason for the downgrade, reports CNN.
“The major factor behind the growth revision, especially for 2018, is the assumption that fiscal policy will be less expansionary than previously assumed, given the uncertainty about the timing and nature of US fiscal policy changes,” the IMF said in its latest World Economic Outlook released on Sunday. The IMF also listed the US economy’s sluggish start to 2017 — with a first-quarter growth of just 1.4 per cent — as another factor in its slashing of current forecasts.
The downgrade comes as the US prepares to release its growth numbers for the second quarter this week, with economists predicting that growth improved to 2.7 per cent. Elsewhere around the world, the IMF also cut growth forecasts for the UK, it expects other European countries including Germany, France and Italy to grow faster in 2017 than earlier predicted, CNN reported.
Growth forecasts for Canada, Japan and China this year were also revised up slightly. The IMF kept its forecast for global growth unchanged at 3.5 per cent for 2017 and 3.6 per cent for 2018.