IMF: Four factors are holding back US growth

It's downgraded its forecast for the world's largest economy...

IMF: Four factors are holding back US growth

Thierry Ehrmann, Flickr

The International Monetary Fund (IMF) has warned that economic headwinds are likely to hit economic growth in the United States, and to hurt its economic recovery.

Following their annual mission to assess the US economy, economists from the IMF have cut their growth forecast from 2.4% to 2.2%.

While they maintain that the economy is in "good shape" as it has created 2.4 million jobs during the past year.

However, employment data has been weakening and the international institution warns that this might be the beginning of a longer trend.

It has also raised concerns that the US dollar could be overhauled by between 10% and 20% - and that it could be disrupted by the result of today's Brexit vote in the UK.

Christine Lagarde, IMF managing director, said that there are four factors that could damage the US recovery. These are a fall in labour force participation rates, falling productivity, increased income inequality, and a high share of the population is now living in poverty which is hurting their prospects.

"If left unchecked, these four forces … will corrode the underpinnings of growth and hold back gains in US living standards," she said.

It welcomed the cooling of US monetary policy and called on policy makers to avoid protectionist policies.