The International Monetary Fund yesterday warned that the US debt burden is on an "unsustainable trajectory" and cautioned against sharp fiscal corrections in order to protect its fragile economy recovery
The IMF report forecast a slow economic growth of 2.5 per cent in 2011 and 2.7 per cent in 2012 with the high unemployment and the dragging housing market weighing heavily on the economic growth.
The IMF estimate for 2011 is below the Federal Reserve's own estimate of 3.3 per cent next year.
The slow growth in the first half of this year especially a dull 1.9 per cent pace in the first quarter was partly due to higher oil prices and ''transient factors'' like the disruptions to industry after the March 11 Japanese earthquake-tsunami disaster, the report said.
"The [US] recovery has proceeded at a relatively slow pace... and has recently weakened," the IMF said.
In its annual review of the US economy, the IMF said that if the United States did not increase its debt ceiling soon to accommodate spending commitments, the impact could create turmoil on global markets.