The IMF Expects the U.S. Economy to Get Worse

This year's growth forecast lowered to 1.5 percent from 2.5 percent

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Let's hope they're wrong. The International Monetary Monetary Fund expressed its pessimism over the U.S. economy on Tuesday. The lender of last resort downgraded its expectations for U.S. economic growth through 2012, predicting it will grow just 1.5 percent in 2011 and 1.8 percent in 2012. The Associated Press says America is not alone:

The IMF has also lowered its outlook for the 17 countries that use the euro. It predicts 1.6 percent growth this year and 1.1 percent next year, down from its June projections of 2 percent and 1.7 percent, respectively.

The gloomier forecast for Europe is based on worries that Greece will default on its debt and destabilize the region.

Olivier Blanchard, the IMF’s chief economist, said “fear of the unknown is high” adding that “strong policies are urgently needed to improve the outlook and reduce the risks.” For the world in general, emerging giants like China, India, and Brazil are expected to maintain strong growth, pushing global economic growth to 4 percent for both 2011 and 2012. According to Reuters, the IMF, which is led by Christine Lagarde (pictured above) gave a strong dose of advice to both European and U.S. leaders:

The IMF's message to European leaders was they should do whatever it takes to preserve confidence in national policies and the euro, and it urged the European Central Bank to lower interest rates if risks to growth persisted.

Investors have questioned Europe's ability to come up with a convincing solution to its festering sovereign debt crisis, which has rattled confidence and roiled financial markets.


The IMF cautioned that hasty budget cuts in the United States could further weaken growth, and it said the U.S. Federal Reserve should stand ready to ease monetary policy further. The Fed meets on Tuesday and Wednesday.

This article is from the archive of our partner The Wire.