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Washington - The International Monetary Fund on Wednesday said it expected the US economy to grow even more slowly this year than it predicted a month ago due to weakness in the first quarter.
The IMF said the world's largest economy should grow 1.7% in 2014, below its June prediction of 2% growth.
US GDP contracted at a 2.9% annual pace in the first three months of the year, dragged down by a weak housing market, a slower pace of restocking by businesses and lower exports.
It was the sharpest decline in five years.
Labour market
The IMF said US activity should pick up to a rate of 3% to 3.5% for the rest of the year and stay at 3% next year and in 2016.
"Still, the drag on growth from the first quarter contraction will not be offset," IMF staff said in their yearly analysis of the US economy.
The lower expectations for growth should contribute to continued slack in the labour market for the next three to four years, with the United States remaining below full employment until 2018, it added.
The IMF also warned that as the US population ages, the economy would not be able to grow above 2% in the longer-term without significant 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.
