WASHINGTON - U.S. economic growth this year will likely be at the weakest pace since the Great Recession ended, the International Monetary Fund said, mostly because of a sharp, weather-related contraction in the first quarter.
But the global lending organization said Wednesday that it still expects growth resumed in the April-June quarter and will remain healthy in the second half of this year and next.
In its annual report on the U.S. economy, the IMF projects growth will be just 1.7 per cent this year, down from a 2 per cent estimate in June. That's below last year's 1.9 per cent pace and would be the slowest annual rate since the recession ended in June 2009.
The IMF's outlook is more pessimistic than the Federal Reserve, which expects growth of at least 2.1 per cent. But it is in line with most other private economists.
The IMF says growth will rebound in the April-June quarter to a healthy 3 per cent to 3.5 per cent and remain in that range for the rest of this year. It also projects the economy will expand 3 per cent in 2015, which would be the best showing since 2005.
"Behind that pessimistic number, we do see a relatively optimistic view of the economy going forward," said Nigel Chalk, deputy director of the IMF's Western Hemisphere department.
The U.S. economy shrank 2.9 per cent in the first three months of the year, its worst showing in five years. Like most economists, the IMF attributed the slowdown partly to harsh winter weather, which closed factories and kept shoppers away from car dealerships and stores. It also cited other temporary factors, including a drop in exports and a slowdown in goods restocking.
But hiring has remained strong since the beginning of the year, despite the grim first quarter. That should boost consumer spending, the IMF said. Businesses will also likely step up their spending on plant and equipment, which has been weak so far this year.