The International Monetary Fund (IMF) has downgraded its forecast for US economic growth because aggressive interest rates from the Federal Reserve have slackened demand. It is said that the efforts of the United States to avoid recession are becoming weak.
In the annual assessment of US economic policies, the IMF said that it now expects US gross domestic product to grow by 2.9 percent in 2022. Its estimate is lower than its most recent forecast of 3.7 percent in April.
The IMF cut its forecast for US growth for 2023 to 1.7 percent from 2.3 percent. The growth rate is now expected to decline to 0.8 percent in 2024.
Last October, the IMF predicted US growth of 5.2 percent this year. But since then the recovery has been slow due to new Kovid-19 variants and disruption in demand chain. On the other hand, a sharp rise in fuel and food prices due to Russia’s war in Ukraine has further fueled inflation, pushing inflation to a 40-year high.
IMF Managing Director Kristalina Georgieva said at a news conference on Friday:”We know that the road to a recession in America is getting more and more difficult.”
“Our economy is recovering from the pandemic. But the Russian invasion of Ukraine and the lockdown in China are taking a toll on the economy.””More negative aftershocks will make the situation more difficult,” he said.
IMF deputy director Nigel Chalk said that if this shock could lead to a recession in the United States. But with a slight increase in unemployment, this slowdown will be mild for a short time. This recession will be similar to the US recession in 2001. On the other hand, strong US savings will support demand.
US Treasury spokesman Michael Kikukawa said the IMF statement showed the US economy was “strongly”facing global challenges due to the Biden administration’s economic policies.