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International Monetary Fund Lowers Its Outlook For U.S. Economic Growth

In its latest forecast, the International Monetary Fund says it sees global growth essentially moving sideways this year, with flat to slower growth in richer countries offsetting higher growth rates in emerging economies such as India.

The report comes ahead of the semiannual IMF and World Bank meeting set to kick off at the end of the week in Washington, D.C., where officials will discuss how economic policy might juice up their respective economies.

The IMF cut its economic outlook for the U.S. to 1.6 percent growth this year, down from 2.2 percent, citing weak business investment and lower demand for goods. It also cautioned the Federal Reserve to hold off raising benchmark interest rates until it sees "clear signs that wages and prices are firming durably."

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The forecast for overall global growth stayed at 3.1 percent for the year.

Advanced economies are expected to grow 1.8 percent next year, compared with 1.6 percent this year. Among other details in the report:

  • Brexit is likely to cause more problems for the U.K. — the IMF expects growth to slow from 1.8 percent this year to 1.1 percent next year.
  • The euro area is also expected to slow slightly, from 1.7 percent in 2016 to 1.5 percent next year.
  • The third-largest economy, Japan, is expected to barely grow this year at 0.5 percent, and again next year at 0.6 percent.
  • Canada's economy is expected to grow 1.2 percent this year and 1.9 percent the following year.

Emerging economies are expected to show a slightly higher growth rate, from about 4.2 percent this year to 4.6 percent next year. A notable exception is China's economy, the world's second-largest, which is projected to keep slowing — 6.9 percent last year to 6.6 percent this year to 6.2 percent next year.

The report adds that:

  • India is expected to grow the fastest among the world's economies, at 7.6 percent this year, and at the same rate next year.
  • Overall, Latin American growth is expected to reverse a decline this year and expand by 1.6 percent.
  • Brazil's economy slowed this year but is expected to turn around next year and grow at 0.5 percent if the country stabilizes politically.
  • Venezuela's economy is expected to shrink again next year.
  • Sub-Saharan African growth is expected to reach 2.9 percent next year, up from a projected 1.4 percent this year.

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