IMF cuts fore­cast for growth of US econ­omy

The National - News - Business - - The Region -

The IMF said yes­ter­day it had cut its growth fore­casts for the US econ­omy to 2.1 per cent in 2017 and 2018, drop­ping its as­sump­tion that the Trump ad­min­is­tra­tion’s tax cut and fis­cal spend­ing plans would boost growth.

In a state­ment fol­low­ing a re­view of US eco­nomic poli­cies, the IMF said the Trump ad­min­is­tra­tion’s push for an­nual growth of over 3 per cent for a sus­tained pe­riod was un­likely to be achieved partly be­cause the labour mar­ket is al­ready at a level con­sis­tent with full em­ploy­ment.

The IMF in April had fore­cast US growth of 2.3 per cent for 2017 and 2.5 per cent for 2018, based partly on gains from ex­pected tax cuts and new fed­eral spend­ing. But given the lack of de­tails on the US ad­min­is­tra­tion’s “still evolv­ing pol­icy plans” the IMF said it de­cided to re­move the as­sumed stim­u­lus from its fore­casts.

The IMF said the Trump ad­min­is­tra­tion’s lat­est bud­get plans would place a dis­pro­por­tion­ate share of spend­ing cuts on to low and mid­dle-in­come house­holds, adding “this would ap­pear counter to the bud­get’s goals of pro­mot­ing safety and pros­per­ity for all Amer­i­cans”.

In­stead, the fund sug­gested a tax pol­icy that would im­prove the fed­eral rev­enue-to-GDP ra­tio, more bal­anced cuts that strengthen the so­cial safety net’s ef­fi­ciency, and ef­forts to con­tain health­care cost in­fla­tion.

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