New York, NY, United States (4E) – The International Monetary Fund (IMF) said on Wednesday that it revised its growth estimate for the U.S. economy following a worse-than-expected contraction during the first quarter. The move was the second time in two months.
The IMF reduced its growth forecast to 1.7 percent, lower by 0.3 percentage point. The decision updated its forecast in mid-June that had already cut almost a percentage point from its previous outlook.
The latest revision is lower than the most pessimistic figure made by U.S. Federal Reserve officials in June at 1.9 percent and far below the mid-point figure forecast by the central bank.
After a contraction in the first quarter that was due to bad weather, the IMF said it predicts growth to rise for the remainder of 2014 and for the entire 2015 to over 3 percent.
The IMF also said that markets may not be adequately pricing in an economic growth that is slower than currently estimated, which could potentially lead to a market correction entering the new year.