IMF advises US to reduce spending, raise more revenue

The United States is expected to grow by 2.6 per cent this year—down 0.1 percentage point from its April forecast, but is still the key driver in global growth, IMF managing director Kristalina Georgieva told reporters.

“The US is the only G20 economy whose GDP [gross domestic product] level now exceeds the pre-pandemic level. This is good for the US and it is good for the global economy.  We expect growth to be a healthy 2 per cent this year on a four quarter over four quarter basis, and sustain a similar pace over the medium term,” Georgieva said after publishing the results of the annual Article IV ‘health check’ report on the US economy.

Inflation will come down to target in the coming year, which is slightly faster than the US Federal Reserve forecasts, the IMF projects.

“We expect core PCE [personal consumption expenditure] inflation to end this year around 2.5 per cent, and be back to target by mid-2025. This being said, we do recognise there are important upside risks to this path. Given those risks, we agreed that the Fed should keep policy rates at current level until at least late 2024,” said Georgieva.

She noted that US debt is rising, and it would be wise to tackle that borrowing now rather than wait until the next crisis or downturn, an IMF release said.

Since the pandemic, more money was flowing into the United States from foreign investors, she added.

Fibre2Fashion News Desk (DS)