Last Updated : GMT 09:57:19
Arab Today, arab today
Arab Today, arab today

IMF warns US against cutting deficit too fast

Arab Today, arab today

Arab Today, arab today IMF warns US against cutting deficit too fast

Washington - AFP

The International Monetary Fund on Tuesday pared its growth forecast for the US economy and warned that the Obama administration could be slicing the deficit too fast for the weak economy. It also said the country\'s \"tepid\" recovery was under threat from the pre-programmed \"fiscal cliff\" combination of sharp spending cuts and tax increases at the year-end, and a worsening of the eurozone debt crisis. The IMF estimated 2012 US economic growth at a 2.0 percent, down from April\'s forecast of 2.1 percent, citing sluggish consumer spending, the key driver of gross domestic product activity. But even that outlook was at risk both from the domestic political stalemate and deepening international economic challenges, the global crisis lender said. \"It is critical to remove the uncertainty created by the \'fiscal cliff\' as well as promptly raise the debt ceiling, pursuing a pace of deficit reduction that does not sap the economic recovery,\" the fund said in its annual report on the US economy. IMF managing director Christine Lagarde, speaking at a news conference, highlighted the risks to the global economy of US political inaction on the looming domestic challenges. \"The domestic effect would be severe, with negative spillovers to the rest of the world,\" Lagarde said. She said the threat of the fiscal cliff and the debt ceiling not being moved has eroded confidence in the country. The fiscal cliff is the result of Congress\'s failure to agree on a deficit reduction plan, resulting in mandated tax increases and spending cuts to take effect by January 1, 2013. Congress remains deadlocked over how to avoid the mandated measures, and the political impasse was not expected to end before the November 6 presidential election. The IMF warned that leaving the measures to take effect could force a US contraction early next year, slamming an already fragile world economy. It noted the nation\'s debt ceiling will need to be raised in early 2013, after a historic battle over the same issue in Congress last year roiled markets and cost the United States its coveted triple-A debt rating for the first time.  The looming need for the limit hike was \"bringing back the risk of heightened uncertainty and financial market disruption,\" the Washington-based institution said, calling it to be lifted as soon as possible. The IMF criticized President Barack Obama\'s proposed fiscal 2013 budget, which calls for slashing the nation\'s deficit by three percentage points to about 5.5 percent of gross domestic product. Even if as expected the deficit cutting is less than three points, the IMF warned that \"this smaller reduction would be too rapid, given the weak economy.\" \"The composition of spending should be as growth-friendly as possible,\" the IMF said, suggesting a larger deficit of about 6.25 percent of GDP would be appropriate. It called for spending on infrastructure, measures to ease the housing crisis, and worker training programs in the distressed labor market, where job growth has nearly stalled and the unemployment rate is at 8.2 percent. The global lender cited risks to US growth, including the limited room for monetary policy to counter the drag of deficit cutting and an erosion of skills in the labor market. But the IMF emphasized that weak consumer spending, which accounts for about 70 percent of the economy, remained a key obstacle to recovery three years after the Great Recession. \"Consumption is expected to be held back by households continuing to repair their balance sheets amid a sluggish recovery of house prices\" after the housing bubble collapsed six years ago.

Name *

E-mail *

Comment Title*

Comment *

: Characters Left

Mandatory *

Terms of use

Publishing Terms: Not to offend the author, or to persons or sanctities or attacking religions or divine self. And stay away from sectarian and racial incitement and insults.

I agree with the Terms of Use

Security Code*

Arab Today, arab today imf warns us against cutting deficit too fast Arab Today, arab today imf warns us against cutting deficit too fast


Arab Today, arab today
Arab Today, arab today Adidas Originals ‘reinterpreted’

GMT 14:52 2016 Thursday ,01 December

Adidas Originals ‘reinterpreted’
Arab Today, arab today At Milaidhoo Island, Maldives

GMT 08:42 2016 Wednesday ,07 December

At Milaidhoo Island, Maldives
Arab Today, arab today Paris's matchbox apartments

GMT 10:37 2016 Saturday ,24 September

Paris's matchbox apartments
Arab Today, arab today Probe finds coalition 'mistake'

GMT 08:00 2016 Wednesday ,07 December

Probe finds coalition 'mistake'
Arab Today, arab today 'Rookie' Trump must fall into line

GMT 08:02 2016 Tuesday ,06 December

'Rookie' Trump must fall into line
View News in Arabic - Business: نفط وبتروكيماويات
Arab Today, arab today
Arab Today, arab today
Arab Today, arab today The summer school raising aspirations

GMT 12:49 2016 Tuesday ,06 December

The summer school raising aspirations
Arab Today, arab today Vanessa Redgrave makes directing

GMT 10:52 2016 Tuesday ,06 December

Vanessa Redgrave makes directing
Arab Today, arab today Indonesia expands protection

GMT 11:39 2016 Tuesday ,06 December

Indonesia expands protection
Arab Today, arab today Pluto's unruly moons

GMT 06:31 2015 Thursday ,04 June

Pluto's unruly moons
Arab Today, arab today Hyundai allows Saudi journalists

GMT 15:14 2016 Thursday ,01 December

Hyundai allows Saudi journalists
Arab Today, arab today Latest Infiniti QX to compete

GMT 13:16 2016 Saturday ,26 November

Latest Infiniti QX to compete
Arab Today, arab today It's a squeeze, but Paris Impressionist

GMT 12:06 2016 Saturday ,03 December

It's a squeeze, but Paris Impressionist
Arab Today, arab today To battle Japanese whaling fleet

GMT 11:53 2016 Monday ,05 December

To battle Japanese whaling fleet

GMT 12:58 2016 Friday ,02 December

Trump, politics on the mind

GMT 13:00 2016 Monday ,05 December

Dubai Women Establishment delegation

GMT 04:15 2016 Thursday ,30 June

World's largest uncut diamond fails

GMT 13:01 2016 Thursday ,01 December

Green groups pressure Spain

GMT 15:59 2015 Wednesday ,27 May

Seoul elevates gardening to high art

GMT 12:39 2016 Saturday ,26 November

Skin patch could help kids

GMT 13:17 2016 Friday ,25 November

Ajman Tourism launches time capsule

GMT 13:12 2015 Saturday ,09 May

Sheikh Sultan opens Sharjah Centre

GMT 09:53 2016 Sunday ,15 May

OMEGA official timekeepers
Arab Today, arab today
Arab Today, arab today
 Arab Today Facebook,arab today facebook  Arab Today Twitter,arab today twitter Arab Today Rss,arab today rss  Arab Today Youtube,arab today youtube  Arab Today Youtube,arab today youtube

Powered and Developed by FilmMatters

Copyright © 2016 Arabtoday

Developed by FilmMatters

© 2016 Arabtoday

arabtoday arabtoday arabtoday
بناية النخيل - رأس النبع _ خلف السفارة الفرنسية _بيروت - لبنان
arabtoday, Arabtoday, Arabtoday