IMF trims forecast for global economic growth, points to U.S. weakness

The International Monetary Fund (IMF) earlier Thursday cut its outlook of global economic growth for this year, citing weakness in growth of the U.S. economy.

However, the financial body added that growth prospects for 2016 remain undimmed, despite the crisis in Greece and recent decline in Chinese financial markets.

The IMF said the global economy should rise 3.3 percent this year, 0.2 percentage point below what it predicted in April. Growth should add 3.8 percent next year, it said, unchanged from earlier estimates.

Much of the blame was put on the United States, whose economy contracted in the first quarter hurt by unusually heavy snowfalls, a strong dollar and disruptions at West Coast ports.

The institution expected the U.S. economy to expand 2.5 percent this year. Last month it lowered the U.S. growth forecast from 3.1 percent in April.

The IMF also noted that lackluster growth in the U.S. spread to Canada and Mexico. However, this general weakness is expected to prove a temporary setback.

In the eurozone, the IMF maintained its prediction of a pickup in growth, despite concerns over Greece's future in the bloc. The body said there has not been any significant contagion. "Timely policy action should help manage such risks if they were to materialize."

In developing economies, the institution said the pickup has been undermined by weaker commodity prices, tighter financial conditions tied to the economic rebalancing in China, as well as geopolitical factors.

The IMF commented on a recent plunge in China's markets saying that it suggests the country could face major problems as it tries to move from an investment-led economic growth model to the one focused on domestic consumption.

Asset price shifts and market volatility could disrupt its predictions, the IMF said, however, it expects the economic situation in Russia and the Middle East to ease over the next year.