IMF cuts US growth outlook, warns of rising protectionism
The IMF lowered its forecast for the US economy Tuesday and warned that the protectionist sentiments voiced in the US presidential election campaign were a threat to global growth.
Columbia: The IMF lowered its forecast for the US economy Tuesday and warned that the protectionist sentiments voiced in the US presidential election campaign were a threat to global growth.
In its newest assessment of global prospects, the IMF said the world`s largest economy would continue to grow modestly -- better than most other leading economies -- but suffer from lagging growth in the rest of the world and the strong dollar.
The IMF said the US should grow by about 2.4 percent this year, compared with its January prediction of 2.6 percent.
The US economy is generally sound domestically, weathering a sharp contraction in the energy industry with strong job creation, construction and consumer spending.
The IMF gave its stamp of approval to the cautious and slow tightening of monetary policy by the Federal Reserve, even as that stirs turmoil elsewhere as US interest rates edge higher.
But it included the United States in urging major governments to invest more, in infrastructure for instance, to strengthen global growth overall and forestall further weakening of cross-border trade and investment.
It also warned that the United States was contributing to a rise in dangerous protectionist and nationalist sentiment that could reverse gains in global economic integration.
In a reference to anti-free trade talk among a number of the candidates battling to win the US presidency in November`s election, the IMF said: "In both the United States and Europe, the political discussion is turning increasingly inward."
It pointed to several sources of protectionist talk, including the structural disruptions of globalization and a rise in income disparity broadly "seen as having favored economic elites while leaving others behind."
"Fear of terrorism also plays a role," the Fund said.
But overall, "The result could be a turn toward more nationalistic policies, including protectionist ones."