Alghadeer TV Alghadeer TV
The International Monetary Fund (IMF) has painted a dismal picture of the US economic growth forecast, predicting that the country would “narrowly” avoid a recession in 2022 and 2023 amid rising inflation and higher interest rates.
“We are conscious that there is a narrowing path to avoiding a recession,” Kristalina Georgieva, the IMF managing director, said in a statement on Friday, noting a high degree of uncertainty.
Georgieva said any temporary “pain” caused by a recession would be “a necessary price to pay” to defeat inflation, according to a report in AFP.
In an annual assessment of US economic policies, known as the Article IV consultation, the Washington-based crisis lender said it expects US gross domestic product (GDP) to grow 2.9 percent in 2022, less than its most recent forecast of 3.7 percent in April.
The annual inflation rate for the US currently stands at 8.6 percent for the 12 months that ended in May 2022, touching a four-decade high, which the AFP report said was “squeezing American families struggling with rising prices for gasoline, food, and housing.”
For 2023, the IMF cut its US growth forecast to 1.7 percent from 2.3 percent and it now expects growth to trough at 0.8 percent in 2024.
To battle inflation, the Fed last week implemented the biggest increase in its benchmark lending rate in nearly 30 years.
The US economy has suffered—as seen by sharp supply and demand inequality—as a result of the coronavirus pandemic and the aftereffects of the ongoing Russian military operation in Ukraine, which has seen the West trying hard to wean itself off its heavy dependence on Russian fuel imports.
The IMF also urged Washington to remove punitive trade duties on China imposed under former president Donald Trump — something his successor has said he is considering.
“Especially at a time when inflation is high and supply chains are strained… we can see clear benefits in rolling back the tariffs that were introduced over the last 5 years,” Georgieva said in the statement.
The IMF report said removing tariffs on steel, aluminum, and a range of products from China “would support growth and help reduce inflation.”
