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U.S. growth for 2014 to be "disappointing" 1.7 pct -- IMF

July 25, 2014

WASHINGTON, July 24 (KUNA) -- The U.S. recovery is gathering steam but managing the exit from zero interest rates and boosting potential growth remain top priorities, the IMF said in its most recent report on the world's largest economy.

The IMF report said that "economic activity in the United States accelerated in the second half of 2013, but an unusually harsh winter conspired with other factors, including ... slower external demand, causing momentum to fade." It added that this led to a contraction in growth of 2.9 percent in the first quarter; the first quarterly contraction since early 2011.

The IMF expects growth to accelerate in the remainder of this year (in the 3-3.5 percent range) "as employment improves, firms boost production, sales and orders of durable goods pick up, and confidence returns." It indicated that "the large drag from the first quarter contraction will be tough to offset, however, and growth for the year as a whole will be a disappointing 1.7 percent," following a 1.9 percent growth in 2013.

Still, the IMF team expects growth to accelerate in 2015 to the fastest annual pace seen since 2005.

Without further policy interventions, the IMF expects "potential growth to level off at around two percent in the coming years given the drag from population aging on labor force expansion and slower productivity growth." This is well below the average potential growth rate of over three percent seen in the decade before the financial crisis, according to the IMF.

The IMF recommends policies "to counter this decline in longer-term growth including greater investment in U.S. infrastructure, improving educational outcomes, a better tax system, and building a skilled labor force." (end) si.rk

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Source: Kuwait News Agency

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