IMF raises growth expectation for US economy

Jul 8, 2010, 15:41 GMT

Washington - The US economy, buoyed by a stronger than expected recovery from the recession, will grow by 3.3 per cent this year - higher than previously projected, the International Monetary Fund reported Thursday.

The IMF attributed the higher expectations to a strong response by the US government, including the massive economic stimulus plan and the financial reform plan to better regulate banking practices. The IMF predicted in April growth of 3.1 per cent.

'While still modest by historical standards, the recovery has proved strong than we had earlier expected,' the IMF said.

Still, the Washington-based IMF projected that economic growth will slow in 2011 to 2.9 per cent and in subsequent years. The IMF warned that despite the upside of the economic recovery, there are still concerns the backlog of loan foreclosures and negative equity could cause another dip in the housing market and hamper economic growth.

The IMF assessment of the US economy comes along with a global analysis released earlier. That report said the world economy is better off than previously believed, largely because of the emergence of developing economies in Asia and Latin America.

Overall, the IMF projected the global economy will grow by 4.6 per cent in 2010, up from a 4.2-per-cent forecast in April and considerably higher than the January forecast of 3.9 per cent. Global projections for 2011 remained steady at 4.3 per cent.

Leading the way in the emerging economies are China, projected to grow 10.5 per cent, India at 9.4 per cent and Brazil at 7.1 per cent.