International Monetary Fund slashes prospect for U.S. growth

From The Washington Post:

The International Monetary Fund announced Tuesday that it is lowering its forecast for U.S. growth this year, and the downgrade is casting a shadow on the outlook for performance among the world’s advanced economies.

The IMF expects that America’s output will expand by a tepid 1.6 percent, more than half a percentage point less than forecast in July. It is the biggest decline for a developed nation and is driven by unexpectedly weak business investment and slim inventories. Overall, the fund predicted that advanced economies — which include Europe, the United Kingdom, Japan and Canada — will grow 1.6 percent, down 0.2 percentage points from the IMF’s last estimate.

However, slower growth in developed nations is being offset by slightly faster improvements in emerging economies, the IMF said. It edged up its forecast for those countries by 0.1 percentage points to 4.2 percent. That was enough to hold the IMF’s estimate of global growth steady at 3.1 percent this year.

“The world economy has moved sideways,” IMF Chief Economist Maury Obstfeld said. “Without determined policy action to support economic activity over the short and longer terms, sub-par growth at recent levels risks perpetuating itself — through the negative economic and political forces it is unleashing.”

The IMF pointed to Britain’s decision to leave the European Union as an example of rising sentiment against globalization that risks undermining international trade and investment, a key factor driving the world economy for decades. British Prime Minister Theresa May said this week that the country would formally declare its intention to break with the E.U. by the end of March and suggested it would withdraw from the single market that has been a hallmark of membership.

The IMF had warned that the so-called Brexit could depress growth in the United Kingdom for years. But on Tuesday, it increased its British …

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