IMF slashes US growth forecast

 
Emma Haslett
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Although the US economy had been hailed as one of the fastest growing, lately it has slowed (Source: Getty)

The International Monetary Fund (IMF) has slashed its forecast for US growth in 2015 to 2.5 per cent, from its previous estimate of 3.1 per cent.

Its forecast for growth in 2016 was cut to three per cent, from 3.1 per cent. The news comes after the US delivered its worst quarter in a year, with economic growth of just 0.2 per cent in the first three months of 2015.

To boost growth, the IMF urged the US Federal Reserve, which is widely expected to hike rates over the next few months, to keep its interest rate low at least until the first half of 2016.

"The US economy's momentum in the first quarter was derailed by unfavourable weather, a sharp contraction in oil sector investment, the West Coast port strike, and the effects of the stronger dollar," it said.

"These developments represent a temporary drag but not a long-lasting brake on growth. A solid labour market, accommodative financial conditions and cheaper oil should support a more dynamic path for the remainder of the year."

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