WASHINGTON, June 23: The US economy appears to be emerging from a period of sluggish growth but is “uncomfortably close” to the “stall speed” associated with past recessions, the International Monetary Fund said Friday.

In its annual report on the United States, the IMF cut its outlook for US gross domestic product growth but said it shares the assessment of US authorities “that the most likely scenario is a soft landing. The IMF said its “baseline” forecast for the US economy is for GDP growth of 2.0 percent over the course of 2007 -- down slightly from its 2.2 per cent forecast in April.

The forecast implies a pickup in activity after the 0.6 per cent growth pace of the first quarter.

The report said US growth is likely to accelerate to 2.7 per cent in 2008, still considered below the optimum pace of 3.0 to 3.5 per cent. In 2006, the world's biggest economy expanded 3.3 per cent.

The US economy's soft patch appears to have come “fortunately” at a time when the rest of the global economy is accelerating, the IMF said.

IMF first deputy managing director John Lipsky said the stronger-than-expected US economic data in recent weeks, while not included in the report, suggest that the benign economic scenario is even more likely.

We're feeling more comfortable that the assumptions we have made about the reacceleration are justified, he told journalists.

Among the risks still facing the US, the IMF said the slump in housing could spill over and affect consumer spending and high oil and commodity prices could push up inflation.

The report said the US Federal Reserve appears to have been prudent in holding its base rate at 5.25 per cent for the past year, and said this rate appears consistent with a soft landing. But it noted that the central bank has “rightly” emphasized inflation risks but must be alert to quickly shifting conditions.

Policymakers will need to be alert to the speed with which employment and activity can weaken in a downturn, the IMF said.

The IMF said the big US balance of payments deficit is not a problem at present but could create some global shockwaves under certain circumstances.

It said the US is still able to attract buyers of Treasury bonds, suggesting that markets are discounting the need for real dollar depreciation to rebalance US demand and reduce the current account deficit. While the innovativeness and depth of US fixed-income markets may help explain the continuing attraction of foreign capital, the size of financing needs and the absence of a dollar risk premium underline potential vulnerabilities,” the IMF report said.

It said the likelihood of financial market chaos in which the dollar is dumped and falls sharply “remains a low probability -- but high-cost – risk that could have global impact.—-AFP