Obama slashes economic growth forecast to 1.7%

US President Barack Obama sharply cut estimates for US economic growth,underscoring the difficult challenge he faces in spurring a stronger recovery and creating more jobs.

US President Barack Obama on Thursday sharply cut estimates for US economic growth,underscoring the difficult challenge he faces in spurring a stronger recovery and creating more jobs.

In a midyear review of his annual budget,Obama predicted average unemployment of 9 per cent in 2012,when he will have to fight for re-election. The president will give a major speech on September 8 on how he plans to lift hiring and growth.

The economic projections make clear there is a real need in the short term to kick-start economic growth and get on a sustained higher growth path, White House budget chief Jack Lew told reporters on a conference call.

Obama must convince voters his policies are working in order to retain the White House,but doubts have grown over his stewardship of the economy after a summer of wild stock market swings and a raft of bad economic data that underlined the risk of the country plunging back into recession.

Economic growth was marked down compared with what the White House had forecast in February,with conditions deteriorating even further after the administration locked down its predictions in June for the midsession review.

As a result,it offered an alternative economic forecast based on what has happened in recent weeks. That projects GDP growth this year of 1.7 per cent,compared with 2.7 per cent expected back in February,with 2.6 per cent forecast for 2012,down from a 3.6 per cent prediction in February.