IMF cuts U.S. 2016 economic outlook forecast to 2.2 pct

The International Monetary Fund (IMF) on Wednesday cut its forecast for the U.S. economic growth in 2016, saying that longer-term challenges might threaten its strong and sustainable growth.

The U.S. economy is expected to grow 2.2 percent in 2016, down from the IMF's forecast of 2.4 percent in April, IMF said in a statement after concluding its annual economic health check on the U.S. economy.

The Washington-based lender kept its projection for the U.S. economic growth in 2017 at 2.5 percent unchanged.

The U.S. dollar, slow business investment and global growth risks would likely pose short-term risks to the U.S. economy, according to the statement.

The IMF highlighted "four forces" that pose challenges to the future growth for the U.S. economy -- declining labor force participation, weak productivity growth, increased polarization in distribution of income and wealth, and rising population in poverty.

These forces would not only pose important economic but also political impact on the United States, Christine Lagarde, managing director of the IMF, said at a press conference on Wednesday.

When asked for comments on the current anti-trade sentiment in the U.S., Lagarde said that there was rising trade protectionism, which will not be conducive to productivity growth.

The IMF called on Washington to resist all forms of protectionism, increase infrastructure investment, reform corporate income tax and strengthen polices to help lower income households, in order to secure sustainable growth.

In regard to the likely impact from Britain's vote to exit the European Union (EU), Lagarde said that a British exit from the EU would have some impact on the U.S. economy through trade and financial channels, but it's unlikely to entail a recession in the United States. Endit