A distinct lack of momentum will drag on the rich world's economic recovery this year, according to the latest Reuters economic outlook in which economists largely bucked a recent trend of rising forecasts.

Median forecasts from the survey of around 250 economists showed slight downward revisions to 2010 quarterly growth forecasts for the United States, while those for Britain and Japan were mostly unchanged from February's poll.

Predictions for recovery had been improving steadily since last year in tandem with an explosive stock market rally.

But with increasingly confused economic data now clouding the outlook, forecasters also pushed back expectations for interest rate hikes in the U.S. and euro zone -- again bucking a trend for more aggressive forecasts to tighten monetary policy.

Low inflation is the key to the outlook, said Ethan Harris, head of North America economics at Bank of America Securities-Merrill Lynch. It allows the Fed to focus exclusively on growth and keep both feet planted firmly on the accelerator.

Economists kept their full-year gross domestic product forecasts for 2010 and 2011 largely unchanged from February's poll. The U.S. economy is expected to outstrip its biggest G7 economic peers with growth of 2.9 percent in 2010 on an annual basis, helped by an improving jobs outlook and corporate spending.

This compares with expected growth this year of 1.6 percent for Japan and 1.2 percent in the euro zone and Britain, down slightly in the euro zone's case from 1.3 percent in last month's poll.

These figures are feeble in comparison to the growth expected in the top emerging countries. The International Monetary Fund expects China's economy to expand by some 10 percent in 2010, with India and Brazil posting 7.7 percent and 4.7 percent respectively.


Cuts in public works, slowing momentum in export growth, and dwindling support from government stimulus measures were expected to hurt Japanese growth early this year.

But respondents said the demand from Asia has supported Japanese exports more than expected.

As long as external demand is strong, the Japanese economy will grow. Looking at economic data, it is hard to foresee a double-dip recession, said Masamichi Adachi, senior economist at JP Morgan Securities.

The euro zone and British currencies have fallen sharply against the dollar and yen this year as worries about sovereign indebtedness have taken hold, along with fears that Britain's election later this year will produce a minority government.

Greece's debt crisis has called the euro zone's credibility into question and economists in the latest poll said they expected the country to endure a much deeper recession than currently forecast by the Athens government.

In Britain, where a general election is due by June, opinion polls show no political party has enough support to win outright.

A hung parliament will mean it becomes very difficult for the ruling party to push through laws, but more critically, fiscal consolidation measures, said Azad Zangana, European economist at Schroders Investment Management.

Britain must cut its vast budget deficit expected to exceed 12 percent of GDP this year, and on Tuesday ratings agency Fitch warned its AAA credit rating profile had deteriorated.