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US growth worries

July 23, 2014

The IMF has lowered its 2014 growth forecast for the United States. It did so on fears that the country's economy may not be able to make up for the sharp contraction in the winter as quickly as previously thought.

https://p.dw.com/p/1Chgr
US worker checking an installation
Image: Reuters

The International Monetary Fund on Wednesday projected the world's largest economy would grow by a "disappointing" 1.7 percent throughout this year.

That is down from a 2 percent growth estimate in mid-June, and even lower than a 2.8 percent estimate the global lender made in April.

"An unusually harsh winter conspired with other factors - including a still-struggling housing market, an inventory correction, and slower external demand" that led the economy to contract by 2.9 percent in the first quarter, the IMF said in its report card on the US economy.

The body added it had appeared harder than previously envisaged to recover from that blow.

Rosy outlook

But the lender hastened to note it was far more optimistic about the next couple of years, saying it predicted US gross domestic product would expand by 3 percent in 2015 and 2016 respectively.

This would mark the highest growth rate recorded for the US since 2005. The IMF argued such an expansion would primarily be driven by strong consumption, a declining fiscal drag and a pickup in residential investment.

IMF hails global recovery - highlights risks

But risks around this outlook include slowing growth in emerging markets as well as oil price spikes related to developments in Ukraine and Iraq.

hg/cjc (dpa, AFP)