IMF Set to Cut U.S., Japan Growth Forecasts Today

The International Monetary Fund has lowered its forecast for economic growth in the U.S. amid rising commodity prices and downgraded its outlook for Japan after the earthquake and tsunami, a German government official said.

Deficit reduction strategies in the U.S. and Japan lack credibility, the IMF said in its World Economic Outlook, the German official told reporters in Berlin today on condition of anonymity because the report will be published in Washington later today. The IMF, which forecast 3 percent U.S. growth this year in January, left its latest projection for global growth unchanged, the German official said, without giving time-frames.

“U.S. forecasters became overly optimistic in the latter part of last year,” John Greenwood, chief economist at Invesco Ltd. in London, said in a telephone interview. “In general, the economic forecasting community doesn’t pay enough attention to the longer-term balance sheet issues of large-scale government debt and private-sector debt and the need for deleveraging in both households and the financial sector.”

While the likelihood of a double-dip economic slump have decreased, risks to growth mean the world economy is more likely to disappoint than to beat expectations, the German official cited the IMF as saying. Commodity-price shocks, especially oil, have emerged as a new risk to global economic expansion, the official said. The IMF and World Bank will hold their Spring meetings in Washington on April 15-17.

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