MNI POLICY: IMF WEO: 2019 US Growth Rev Down;One Hike Possible

--Global Growth Also Revised Down, But 2020 Rebound Seen

By Kevin Kastner

     WASHINGTON (MNI) - The International Monetary Fund issued the April update

to their World Economic Outlook Tuesday. The update shows a downward adjustment

to the forecasts for global growth in 2019 and a rebound in 2020, with some

downside risks weighing against the outlook for the next two years.

     For the U.S., the outlook is for progressively slower growth in 2019 and

2020, but the IMF's baseline forecast includes one possible additional rate hike

in the second half of 2019. 

     Here are the key points from April WEO update:

     - The WEO update expected world output to slow to 3.3% pace in 2019 from

3.6% in 2018, a slight downward adjustment to the 2019 pace from a 3.5% estimate

in the January WEO. Global growth is expected to rebound in 2020 to 3.6%.

     - For the U.S., the IMF's report sees 2.3% growth in 2019, after a 2.9%

rate in 2018, with further slowing to 1.9% in 2020. The 2019 rate was revised

down from 2.5% in the January estimate, while the 2020 estimate was revised up

from 1.8% previously.

     - Despite the expected slowdown in U.S. growth, in large part due to the

waning impact of the 2018 fiscal stimulus, the IMF noted that "labor markets are

expected to tighten further and wage growth to pick up, likely warranting a

further rate hike in the second half of the year." The IMF noted the FOMC's

"patient" stance on monetary policy and encouraged data-dependence for future

policy decisions.

     - Risks to global growth include continued trade tensions, but the IMF

acknowledged progress in this area, citing the signing of the replacement for

NAFTA and the extension of the trade "truce" between the U.S. and China. It

cautioned, however, the final outcome of both remains questionable and so remain

a risk for domestic and global growth.

     - Another risk cited was the lack of Brexit deal to this point, saying a

no-deal Brexit would disrupt supply chains and boost trade costs. The IMF also

noted the continued stress on Italian banks from elevated yields.

--MNI Washington Bureau; tel: +1 202-371-2121; email: kevin.kastner@marketnews.com

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