IMF Downgrades US Forecast to 2.2% in 2016

The International Monetary Fund downgraded its forecast for the U.S. economy this year and said America should raise the minimum wage to help the poor, offer paid maternity leave to encourage more women to work and overhaul the corporate tax system to boost productivity.

In its annual checkup of the U.S. economy, the IMF on Wednesday predicted 2.2 percent U.S. growth this year, down from 2.4 percent in 2015. In April, the international lending agency had forecast 2.4 percent growth for 2016.

Still, IMF managing director Christine Lagarde, citing a healthy job market, says “the U.S. economy is in good shape.” U.S. unemployment fell last month to an eight-year low 4.7 percent. Employers have added a solid 200,000 jobs a month over the past year.

The U.S. is growing faster than most other advanced economies. The IMF foresees 1.5 percent growth this year for the 19 countries that use the euro currency, and 0.5 percent growth for Japan.

The American economy got off to a slow start this year, expanding at a lackluster 0.8 percent annual pace from January through March. A strong dollar hurt exporters by making their goods costlier in foreign markets. Energy companies have slashed investment in the face of low oil prices.

Lagarde also said the U.S. faces longer term economic problems, including an aging labor force, weak productivity growth and growing income inequality.

via Kitco

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza