The International Monetary Fund (IMF) lowered its forecast for economic growth in the US this year and next year and spoke critically about economic development after the Great Recession.
The IMF lowered its forecast for US growth to 2.1 percent for 2017 and 2018, the Fund is not expecting plans for tax breaks and fiscal spending plans of the administration of President Donald Trump to boost gross domestic product (GDP).
In April, within its global report, however, the IMF was putting growth of 2.3 percent in 2017 and 2.5% in 2018 in the US, partly based on the contribution of the expected decrease in new taxes and federal spending. Only the lack of details “still developing political plans” of the US administration IMF has decided to remove from the assessment underlying assumptions incentives.
The institution stated that it was unlikely ambition of the administration of annual growth above 3 percent for an extended period to happen because the labor market is now at a level consistent with full employment.
More distant prospects of the US are not better or even worse – 1.9% and 1.8% growth respectively for 2019 and 2020.
“The US economy is not functioning as well as it can,” says the report, the authors in this case given the uneven distribution of income. “Compared to historical growth performance (in previous years) was too low and too uneven.”
According to the IMF the US continue to suffer because of rising indebtedness, 10-20 percent overvalued dollar and steadily deteriorating international investment positions.
The external position is slightly weaker than the medium-term fundamentals and this should lead to sound policy. The current account deficit is expected in the medium term to reach 3% of gross domestic product, analyze IMF experts.
One reason for the reduction in the growth forecast is the fact that during the consultations the IMF was left with the impression that the administration’s plans for solving the above problems are still very unclear. Amid this uncertainty, IMF has assumed in its baseline scenario for stable political conditions.
