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IMF Cuts U.S. Growth Forecast, Sees European Contagion Risk

The International Monetary Fund cut its forecast for U.S. growth in 2011 for the second time in two months, warning that further setbacks to a recovery pose growing threats to the world economy, along with potential contagion from the European debt crisis.

The U.S. economy will grow 2.5 percent this year, down from 2.8 percent projected in April, the IMF said today, citing higher commodity prices and bad weather in the first quarter and a weak housing market. The IMF forecasts 2.7 percent growth in 2012, slower than the previous estimate of 2.9 percent. The Washington-based IMF sees the world economy expanding 4.3 percent this year, down from 4.4 percent two months ago. It left a 4.5 percent forecast for next year unchanged.