The International Monetary Fund expects the United States economy to grow less than previously expected this year and next, German newspapers said today.
According to business dailies Handelsblattand Financial Times Deutschland, the IMF's World Economic Outlook will show the fund expects US growth to reach 3.5 per cent this year and dip to 3.3 per cent in 2006. In April, the IMF forecast US growth of 3.6 per cent for both years.
However, the FTDsaid the IMF will raise its forecast for growth in Japan to 2 per cent for this year and next when the report is officially released next week. The IMF in April had forecast the world's second-largest economy to expand by just 0.8 per cent this year, and 1.9 per cent in 2006.
But new figures this week showed Japan's economy grew more than twice as fast as initially estimated in the second quarter, expanding by 0.8 per cent in the quarter and taking annualised growth to 3.3 per cent, on a par with the United States.
The healthy growth figures and reformist Prime Minister Junichiro Koizumi election victory on Sunday have fuelled hopes of a turnaround in the world's second-largest economy.
The FTDsaid the IMF had also reduced its forecast for economic expansion in Britain, seeing growth of 1.9 per cent this year and 2.2 per cent in 2006 from an earlier expectation of 2.6 per cent growth for each year.
Handelsblattsaid high oil prices and the fallout from Hurricane Katrina, which has devastated large parts of the US Gulf coast, were behind a cut to the global growth outlook.
It said the IMF has cut its global outlook for 2006 to a still-healthy 4.3 per cent, from 4.4 per cent, but the current year's forecast of 4.3 per cent growth would stay.
Both the Handelsblattand FTDsaid growth forecasts for the euro zone will be cut to 1.2 per cent this year, from 1.6 per cent, and 1.8 per cent in 2006.
The FTDsaid the IMF thought euro zone interest rates, held at 2 per cent for more than two years, were appropriate but might have to be revised if growth prospects worsened. Most economists expect the ECB's next rate move to be a rise but not until well into 2006.