The economic recovery in the United States
remains "tepid" and the economy will grow at only a modest pace in
coming years, the International Monetary Fund said Tuesday.
Weaker household spending, fiscal restraint and low global demand will keep growth to a modest 2 per cent in 2012 and 2.25 per cent in 2013, the IMF said. Growth slowed to about 2 per cent in the first half of the year after stronger growth in late 2011.
The financial crisis in Europe and the threat of looming tax hikes and government spending cuts if Congress does not act later this year could further damage the US economy, it warned.
The IMF pointed to "strong headwinds" in private consumption, still depressed housing prices, high unemployment, weaker business investment, and tight credit for consumers as weighing on the US economy. Though exports have been a positive note, foreign demand in Europe has slowed, it said.
The US government said last month gross domestic product (GDP) rose at annualized growth rate of 1.9 per cent in the first quarter of the year. In the final quarter of 2011, the growth rate was a strong 3 per cent, on the back of increases in private consumption and efforts by companies to restock inventories.
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