IMF says US economy uncomfortably close to stall speed
25 Jun 2007
bbj.hu
The International Monetary Fund on Friday said that the growth of US economy was “uncomfortably close” to the 2% “stall speed” associated with past recession.
The fund, in its annual report on the United States, said it shared with the US authorities' view that the most likely scenario is a soft landing as growth recovers and inflation falls, “although both are subject to risks.” “The US slowdown has mainly reflected a drag from residential investment due to the ongoing housing market correction,” said the IMF report. “Consumption, by contrast, has remained strong, supported by solid employment and wage growth.” “Benign US financial conditions have minimized spillovers elsewhere and, with global activity supported by faster growth in the Euro area and Asia, the US current account deficit has stabilized, albeit at high levels,” it added.
Due to the slowdown, the IMF cut its forecast for US economic growth to 2% this year from the 2.2% estimate the fund issued in its World Economic Outlook two months ago. But the IMF predicted that the US economy would grow 2.75 % in 2008. “We, like the US authorities, expect a favorable outcome for US growth,” said John Lipsky, the IMF's leading deputy director, presenting the annual US economic report. “We expect to see a gradual reacceleration towards a sustained pace of around 3% by 2008,” he said.
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