The global institution forecasts 2.9% of GDP in 2022 against 3.7% projected in April.
The United States is on a “narrow path” to avoid a recession in the face of inflation and interest rate hikes, IMF chief Kristalina Georgieva said on Friday as the institution cut its growth projections for the world’s largest economy. The IMF now projects a 2.9% expansion for US gross domestic product in 2022 from 3.7% projected in April. For 2023, growth falls to 1.7%, according to these new projections from the International Monetary Fund in its annual review of the US economy. “We expect the US economy to slow in 2022-23 but narrowly avoid a recession”says the IMF.
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But “there remain risks that the current headwinds will prove more persistent than expected or that the economy will suffer another shock that would then turn this downturn into a brief recession”adds the institution. “The expected slowdown in US demand, combined with the necessary tightening of financial conditions around the world, has the potential to negatively impact individuals, companies and countries that have borrowed in dollars”acknowledges the IMF.
However, the Fund welcomes the monetary policy of the American Central Bank (Fed), which drastically raised its key rates and began to reduce its balance sheet, inflating billions of dollars in asset purchases during the slowdown due to the pandemic. . “The priority now is to quickly slow wage and price growth without pushing the economy into recession”says the IMF.
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