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IMF lowers U.S. growth forecast to 2.0 pct in 2014

English.news.cn   2014-06-16 22:09:31

WASHINGTON, June 16 (Xinhua) -- The International Monetary Fund (IMF) on Monday cut its U.S. economic growth forecasts for this year from the previously predicted 2.8 percent to 2 percent due to a weak first quarter performance, but kept its 2015 projection unchanged at 3 percent.

"In the early part of this year, as a harsh winter conspired with other factors, momentum faded in the U.S. economy, " said the IMF in its annual economic assessment report of the U.S. economy released Monday.

Noting the recent rebound in economic activities in the United States, the IMF said that this renewed dynamism "provides only a partial offset to the weak first quarter and so growth is now projected at 2 percent for 2014, rising to 3 percent in 2015."

In April the IMF expected the U.S. economy to increase 2.8 percent this year and 3.0 percent next year considering the upward situations in the advanced economies.

However, the brutally cold winter seriously affected the trade and private investment in the country in the first quarter, which caused the U.S. economy to suffer its first contraction since the first quarter of 2011 and to shrink at an annual rate of 1.0 percent, according to the recent data of the Commerce Department.

The IMF said the U.S. job growth remains healthy but labor markets are weaker than is implied by the unemployment rate, which is 6.3 percent in May, the lowest level in five years.

"Long-term unemployment is high, labor force participation is well below what can be explained by demographic factors and wages are stagnant," said the report.

The IMF said the U.S. government should provide continued policy support to face the uncertainties in the economy.

"Ideally, steps should be taken to approve and implement a credible medium-term fiscal consolidation plan so as to provide the flexibility for more near-term fiscal support to the economy," said the report.

The IMF also asked the U.S. government to take measures for lowering longer-run growth as potential growth is forecast to average around 2 percent for the next several years, below both historic averages and the outlook assessed at the last year's report.

Such slowing down was caused by a combination of factors including population aging and more modest prospects for productivity growth. The IMF suggested the U.S. government take measures involving investments in infrastructure and education, improving the tax system and active labor market policies.

"They may also include reaching agreement on a broad, skills- based approach to immigration reform as well as fully capitalizing on the gains from rising U.S. energy independence while protecting the environment," said the IMF in the report.

The international organization reckoned no single measure will be sufficient and a manifold solution will certainly be required. "There is no shortage of good ideas currently under public debate and so the challenge ahead is to forge political agreement on specific legislation."

Editor: Mu Xuequan
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