IMF cuts US growth forecast to 2pc
Washington urged to boost minimum wage and embark on infrastructure-building programme
The International Monetary Fund slashed its forecast for economic growth in the United States and urged policymakers to keep interest rates low and raise the minimum wage.
The global crisis lender said on Monday in its annual report card on the US economy that the country will likely grow only 2 per cent this year, compared with the previous estimate of 2.8 per cent, blaming mainly the unexpected contraction in the first quarter.
It said growth is likely to rebound to 3 per cent next year, but to ensure that, the government should take measures like increasing the minimum wage and embarking on a strong infrastructure-building programme.
There is no single measure that is going to deal with all those issues
The IMF said the US Federal Reserve should not expect the economy to get back to full employment before the end of 2017 and that it could afford to hold its key interest rate at the zero level past the middle of next year, when the Fed has signalled it expects to raise the rate.
"The scars of recession are still visible," IMF managing director Christine Lagarde warned.
She cited still-high long-term unemployment, low labour force participation and the fact that some 50 million Americans still live in poverty.
"There is no single measure that is going to deal with all those issues," she said. "The US should invest in its future … The priority is to invest in people and to invest in infrastructure."