IMF to cut US growth forecast

THE International Monetary Fund has warned that economic growth in the United States is likely to be lower than it had previously anticipated and said it would probably cut its forecasts next month.

The warning, which came after America's leading share index, the Dow Jones Industrial Average, slumped 269.5 points to 8043.63 on Monday, triggered fresh falls in share prices throughout Asia and threatened to destabilise London stocks still further.

The FTSE 100 index closed below 4000 at 3996.4 last night and traders said it could go much lower during the course of the week. Tom Hougaard at City Index said: 'Yesterday was really clear evidence that large amounts of stocks are for sale at the moment. Institutional portfolios are being liquidated at ever-lower prices.'

The Washington-based IMF said in its annual review of the US economy that 'recent data releases and other developments including the sharp decline in equity prices in recent weeks have exacerbated the downside risks to the outlook for both personal consumption and business investment'.

It had thought the US economy would expand by 2.5% this year and 3.25% in 2003 but it said 'downward revisions to the growth projections' were likely.