US growth fore­cast slashed to 1.6%

The Myanmar Times - - International Business -

THE In­ter­na­tional Mon­e­tary Fund has slashed its fore­cast for the world’s largest econ­omy, say­ing the United States has lost some of the mo­men­tum that has an­chored global growth the last few years.

The global cri­sis lender pre­dicted the US econ­omy would ex­pand by just 1.6 per­cent this year, com­pared to its July es­ti­mate of 2.2pc and one per­cent­age point be­low 2015’s pace.

The slower than ex­pected ac­tiv­ity is a re­sult of the on­go­ing oil in­dus­try slump, de­pressed busi­ness in­vest­ment and a per­sis­tent sur­plus in busi­ness in­ven­to­ries, it said.

But also un­der­pin­ning the turgid pace of ac­tiv­ity, the IMF said, is un­cer­tainty over the loom­ing pres­i­den­tial elec­tion, which pits Demo­crat Hil­lary Clin­ton against her un­pre­dictable ri­val, Repub­li­can Donald Trump.

With the US econ­omy ex­pected to re­main at a slug­gish pace, the IMF held its growth fore­cast for the en­tire world econ­omy this year un­changed at a trou­blingly slow pace of 3.1pc.

“Softer than ex­pected ac­tiv­ity in the sec­ond half of 2015 and the first half of 2016 points to some loss in mo­men­tum in the US,” the IMF said.

“A pro­longed in­ven­tory cor­rec­tion cy­cle and weak busi­ness in­vest­ment has prompted a down­ward re­vi­sion of the 2016 fore­cast.”

“The weak­ness in cap­i­tal spend­ing re­flects in part still-neg­a­tive en­ergy in­vest­ment, dol­lar ap­pre­ci­a­tion, fi­nan­cial tur­bu­lence ear­lier in the year, and height­ened pol­icy un­cer­tainty re­lated to the elec­toral cy­cle.”

The IMF also trimmed its US growth fore­cast for 2017 to 2.2pc, sug­gest­ing only a mod­est re­bound.

It said Wash­ing­ton needs to boost in­fra­struc­ture in­vest­ment but also, mind­ful of the ris­ing costs of health care and so­cial se­cu­rity with an age­ing pop­u­la­tion, re­quires “a cred­i­ble deficit and debt-re­duc­tion strat­egy”.

But it sug­gested that US politi­cians could do more dam­age to the econ­omy if they fol­low na­tion­al­ist ten­den­cies in the US elec­tion to an ex­treme.

It warned of a po­lit­i­cal move­ment in richer coun­tries “that blames glob­al­i­sa­tion for all woes and seeks some­how to wall off the econ­omy from global trends rather than en­gage co­op­er­a­tively with for­eign na­tions”. –

Newspapers in English

Newspapers from Myanmar

© PressReader. All rights reserved.