IMF lowers US economy growth forecast
1 July, 2017
The IMF last Tuesday downgraded its growth forecasts for the US economy in 2017 and 2018, citing significant policy uncertainties, news wires reported. While President Donald Trump’s administration proposed reduction of fiscal deficit and debt, re-prioritisation of public spending and revamp of the tax system,”it became evident that many details about these plans are still undecided,” the IMF said in a statement.
Given these significant policy uncertainties, the IMF decided to remove the assumed fiscal stimulus from its forecasts for the US economy earlier this year and base its new projections on unchanged policies. “Specifically, it neither builds in the effect of tax reform nor the expenditure reductions proposed in the administration's budget," the IMF said, expecting the US economy to grow 2.1% both in 2017 and 2018, down 0.2 and 0.4 percentage points respectively from its previous forecasts in April.
Significant policy uncertainties usually imply “larger-than-usual, two-sided risks” to the forecasts, the IMF said. Thus, the Fund believes the Trump administration is unlikely to accelerate annual US economic growth to sustained 3% from 1.6% last year.“