IMF cuts 2017 economic growth forecast for US

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SME Times News Bureau | 28 Jun, 2017
The International Monetary Fund revised its 2017 gross domestic product (GDP) growth forecast for the US downward from 2.3 percent to 2.1 percent, citing the Trump administration's inability to implement its economic policies.

The IMF on Tuesday also cut its forecast for 2018 US GDP growth to 2.1 percent from 2.5 percent, Efe news reported.

The Washington-based international financial institution said the Trump administration "intends a wide-ranging overhaul of policies, although a fully articulated policy plan has yet to emerge".

The IMF warned of "significant uncertainties" regarding fiscal consolidation, infrastructure investment, renegotiation of trade treaties and immigration policy as some of the factors in the more cautious forecast for the US economy.

The international financial institution also said that calls for protectionism and economic nationalism by US authorities cast medium-term shadows on the economy and "a broader retreat from cross-border integration would represent a downside risk to trade, sentiment and growth".

After being sworn in on January 20, President Donald Trump promised to jump-start the US economy and generate annual GDP growth of 3 percent during his term in the White House.

Regarding Washington's monetary policy, the IMF, which is led by Managing Director Christine Lagarde, said the US economy was approaching full employment with a stable inflation rate and the Federal Reserve should continue gradually raising short-term interest rates, currently between 1 percent and 1.25 percent.

The US dollar, according to the IMF, is "moderately overvalued" between 10 percent and 20 percent.