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IMF cuts U.S. growth outlook sharply to 1.6%

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Staff Writer | October 4, 2016
Advanced economies should intensify monetary, fiscal and structural efforts to boost growth in order to avoid adding strength to protectionist calls, the International Monetary Fund said (IMF).
U.S. growth outlook
America   World Economic Outlook report
IMF retained the global growth forecasts for this year and next at 3.1 percent and 3.4 percent, respectively, in its latest World Economic Outlook report.

Global growth is expected to pick up slightly next year, on the back of strength from emerging markets, the report said.

Growth projection for advanced economies for this year was cut to 1.6 percent from 1.8 percent. The outlook for next year was retained at 1.8 percent.

"Taken as a whole, the world economy has moved sideways," IMF Chief Economist Maurice Obstfeld said.

Stressing on the vital importance to defend the prospects for increasing trade integration, Obstfeld cautioned that turning back the clock on trade can only deepen and prolong the world economy's current doldrums.

The IMF urged central banks in advanced economies to maintain easy monetary policies, while adding that such measures alone will not restore vigor to economies dogged by slowing productivity growth and aging populations.

The IMF cut the U.S. growth outlook sharply. The growth forecast for this year was lowered to 1.6 percent from 2.2 percent and the prediction for next year was cut to 2.2 percent from 2.5 percent.

The IMF attributed the downgrade to following a disappointing first half caused by weak business investment and diminishing pace of stockpiles of goods.

The lender also said that further increases in the Federal Reserve's policy rate should be gradual and tied to clear signs that wages and prices are firming durably.

Meanwhile, Eurozone's growth forecast for this year and next was raised by 0.1 percentage points to 1.7 percent and 1.5 percent, respectively. Among the big four, growth forecasts for Germany and Spain were also boosted, but the projections for France and Italy were lowered.