IMF Cuts Forecast for US Economy

The IMF predicted that the US economy will grow by a "robust" 3.1% in 2015 and 2016. Though that is still the fastest among major developed economies, it is nevertheless a downturn from their January forecast of 3.6% and 3.3% for the next two years respectively. In 2014, the American economy grew by 2.4%. 

"Consumption — the main engine of growth — has benefited from steady job creation and income growth, lower oil prices, and improved consumer confidence," the fund said in it's semi-annual report on World Economic Outlook. 

The IMF's forecast for the global economy as a whole is that it will grow by 3.5% over the course of the year, which is consistent with it's January forecast. The fund is more optimistic about 2016, raising its outlook to 3.8% from January's 3.7% prediction.

The 19 countries that make up the eurozone  - which saw only 0.9% growth last year — are now expected to see an economic expansion of 1.5% in 2015 and 1.6% in 2016. Both forecasts are an increase over January predictions of 1.2% and 1.4%.

The outlook is also looking better for Japan — whose economy actually shrank by 0.1% in 2014.  The fund expects to see growth of 1% this year and 1.2 % the next, up from 0.6% and 0.8% in January.

The US dollar has gained 29% against the Euro and 19% against the Japanese yen since June 30, which gives relatively cheaper exports from those countries an advantage on world markets.

The IMF did not change its prediction that China would see a decrease in growth rate to 6.8% this year, down from 7.4% in 2014. 

"We think it is a good slowdown for China," Gian Maria Milesi-Ferretti, the fund's deputy director for research, told reporters, explaining that China's growth was transitioning from investment in factories and real estate which can often be wasteful, to consumer spending which is slower but more stable. 

Meanwhile India is set to move in the other direction and outpace China, the fund predicts. Projected growth for 2015 is 7.5%, up from 6.8% in January.