Expect 2% US growth: IMF
2012-07-04 15:52:31
The United States economy will grow by 2 per cent this year and about 2.25 per cent in 2013 amid a "tepid" recovery and the European debt crisis, the International Monetary Fund (IMF) said, lowering its previous projections.
The US remains "subject to elevated downside risks, in light of financial strains in the euro area and uncertainty over domestic fiscal plans", the IMF said in a statement today. In an April report, the IMF forecast US growth of 2.1 per cent this year and 2.4 per cent in 2013.
"Further easing" by the Federal Reserve might be needed "if the situation was to deteriorate", IMF Managing Director Christine Lagarde said at a press conference in Washington yesterday.
She said she welcomed previous actions by the Fed to help the US economy, including the expansion of the so-called Operation Twist that replaces short-term Treasuries in the Fed's portfolio with longer-term debt to lengthen the average maturity of its holdings.
Ms Lagarde said the "downside risks" include the euro crisis and the "fiscal cliff" of expiring tax cuts and mandatory spending reductions that will take effect at the end of the year unless Congress acts.
She added that the risk of US lawmakers not reaching an agreement on the federal debt ceiling "is also a clear potential for financial market disruption".