“The United States is on a ‘narrow path’ to avoid a recession amid rising inflation, interest rates,” IMF chief Kristalina Georgia said on Friday as the agency cut its growth forecast for the world’s largest economy. The IMF now forecasts a 2.9% increase in US gross domestic product in 2022 from the 3.7% forecast in April. Growth for 2023 is down to 1.7%, according to these new forecasts from the International Monetary Fund’s annual review of the US economy. “We expect the US economy to slow down in 2022-23, but it is unlikely to avoid a recession”says the IMF.
But: “There is a risk that the current reverse winds will be more persistent than expected or that the economy will suffer a ‘shock’ which will later turn this slowdown into a short-lived downturn.”adds the institution. “The expected slowdown in US demand, coupled with the necessary tightening of financial conditions around the world, could have a negative impact on individuals, companies and countries that have borrowed in dollars.”accepted by the IMF.
However, the Fund welcomes the monetary policy of the US Federal Reserve (Fed), which has sharply raised its key interest rates and begun to reduce its balance sheet, inflating billions of dollars in asset purchases during the slowdown due to the epidemic. “Now the priority is to quickly slow down the growth of wage prices without pushing the economy into recession.”says the IMF.
Source: Le Figaro
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