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Washington (AFP) – The International Monetary Fund on Wednesday lowered its U.S. economic growth forecast for 2014 after severe winter weather in the first quarter delivered a sharp contraction.

The IMF projected that the world’s largest economy would grow a “disappointing” 1.7 percent this year, after a 1.9 percent expansion in 2013.

The forecast marked another downgrade from the IMF, which estimated U.S. growth of 2.0 percent for the year in mid-June, down from a 2.8 percent estimate in April.

“An unusually harsh winter conspired with other factors, including an inventory correction, a still-struggling housing market, and slower external demand” to lead the economy to contract by 2.9 percent in the first quarter, the 188-nation global lender said.

Although activity appears set to pick up in the rest of the year to well above the country’s growth potential in a range of 3.0-3.5 percent, it would not be able to offset the first-quarter drag, the worst contraction in five years.

“This means growth for the year as a whole will be a disappointing 1.7 percent,” the IMF said in a statement following its annual report card on the member economy, known as an Article IV consultation.

But the following year should see a strong rebound, with 2015 growth picking up steam to the fastest annual pace since 2005, it said.

The IMF predicted the improvement would be driven by strong consumption growth, a declining fiscal drag, a pickup in residential investment, and easy financial conditions.

“Risks around this outlook include slowing growth in emerging markets, oil price spikes related to events in Ukraine and Iraq, and earlier-than-expected interest rate rises.”

AFP Photo/Joe Raedle

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Jeff Danziger lives in New York City. He is represented by CWS Syndicate and the Washington Post Writers Group. He is the recipient of the Herblock Prize and the Thomas Nast (Landau) Prize. He served in the US Army in Vietnam and was awarded the Bronze Star and the Air Medal. He has published eleven books of cartoons, a novel and a memoir. Visit him at DanzigerCartoons.

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