International Monetary Fund cuts U.S. growth outlook amid absent policies

The IMF’s assessment casts doubt over a more optimistic forecast in the White House budget proposal which projects growth will accelerate to 3% by 2020 and keep up that pace for seven more years

The International Monetary Fund has cut its outlook for USA economic growth amid uncertainties about President Donald Trump's economic policies.

However, the International Monetary Fund believed the Trump administration is unlikely to accelerate annual US economic growth to sustained 3 percent from 1.6 percent a year ago, "even with an ideal constellation of pro-growth policies".

The IMF on Tuesday also cut its forecast for 2018 US GDP growth to 2.1 per cent from 2.5 per cent, Efe news reported.

Trump's budget for the fiscal year ending in 2018 assumes the economy will grow by 2.9 per cent on average in the coming decade, but the IMF's central forecast says this is unlikely to be achieved in the absence of a clear plan.

Trump claims, backed by his team of high-ranking economists with backgrounds in the USA financial sector and Main Street economy, that his plans to boost infrastructure spending by $200 bln from the U.S. budget, and another $800 bln from private investors, would spur the United States business activity, employment and put sustainable upward pressure on the U.S. salaries and wages.

The IMF said: "Many details about these plans are still undecided".

A Treasury spokesperson said "we appreciate the IMF's support of the administration's broad policy objectives" as it aims to create policies to boost USA and global economic growth.

"A comprehensive policy package is needed", the report said.

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"The U.S.is effectively at full employment", the lender said.

The worldwide financial institution also said that calls for protectionism and economic nationalism by USA authorities cast medium-term shadows on the economy and "a broader retreat from cross-border integration would represent a downside risk to trade, sentiment and growth".

Any increase in spending could boost growth, but Trump would be forced to get spending hikes past the ultra-conservative wing of the Republicans, who have already balked at measures which would increase the fiscal deficit.

The US is enjoying its third longest economic expansion since 1850. By 2020, Trump says, his economic planning will push annualised GDP growth above the 3 percent threshold, and this economic prosperity will last for seven more years. This is ultimately the result of the president's tax reform agenda, which now is up the in the air.

In a statement, the Treasury Department said that it appreciated the IMF's support for the administration's broad policy efforts in such areas as boosting infrastructure investment and simplifying the tax system.

"The US economic model is not working as well as it could in generating broadly shared income growth", Werner said during a press conference.

To put the country's finances back on a healthy path, the International Monetary Fund said, some sort of consumption tax would be necessary, such as a tax on carbon emissions or gasoline.

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