miércoles, 23 de julio de 2014

A poor year for US growth...

The IMF has again reduced its expectations for growth in the US. Now, the Fund is projecting a 1.7% growth rate for 2014. That's bad news for Mexico, for whom exports to the US are so important to its own growth.

It's not all bad news, though: the damage was done in the first quarter, when GDP contracted 2.9%. The rest of the year should be quite decent: the IMF expects the US economy to grow 3% - 3.5% in what remains of 2014.

The IMF has reservations about US growth over the longer-term, putting the growth rate at 2%, tops, unless there are major reforms, "including tax and immigration changes, more investment in infrastructure and job training, and the provision of childcare assistance, which could help lure more Americans into the workforce" (July 23 New York Times). The Fund even went so far as to argue there is a "strong case" for more government spending to support the recovery, provided there's a plan to tackle entitlement spending later.

The need for structural reforms to boost the economy's sustainable long-term growth rate isn't confined to Mexico.

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