New | IMF lowers world growth forecasts, points to US weakness

The International Monetary Fund on Thursday trimmed its forecast for global economic growth for this year to take into account the impact of recent weakness in the United States.

But the global financial institution said growth prospects for next year remain undimmed, despite Greece’s debt crisis and recent volatility in Chinese financial markets.

In an update to its World Economic Outlook report, the IMF said the global economy should expand 3.3 per cent this year, 0.2 percentage point below what it predicted in April.

Growth should speed up to 3.8 per cent next year, it said, unchanged from earlier forecasts.

The IMF pinned much of the blame for the lower growth forecast on the United States. The US economy contracted in the first quarter, hurt by unusually heavy snowfalls, a resurgent dollar and disruptions at West Coast ports.

The IMF said it expected the US economy to grow 2.5 per cent this year - it lowered the US growth forecast last month from 3.1 per cent in April. The IMF also said US economic sluggishness had spilled over to Canada and Mexico.

"(But) for the most part, it was a series of accidents ... and the rest of the year should not be very much affected," Olivier Blanchard, the IMF’s chief economist, said in a press conference.