IMF cuts US growth forecast to 2.3% amid recession fears

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IMF US growth forecast

Washington: Contrary to the expected economic growth of 2.9pc, the International Monetary Fund (IMF) on Tuesday warned that avoiding a recession in the United States will be “increasingly challenging” as it cut its 2022 growth forecast to 2.3pc in late June as recent data showed weakening consumer spending.

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The Fund also cut its 2023 real GDP growth forecast to 1.0pc from 1.7pc on June 24, when it met with U.S. officials for an annual assessment of the U.S. economic policies.

The final report was revised to reflect downward revisions to U.S. first-quarter GDP and weak consumer spending data in May.

But it continued to highlight the challenges of high inflation and the steep Federal Reserve interest rate hikes needed to control prices.

IMF executive directors said in a statement that a broad-based inflation surge was “posting systemic risks to both the United States and the global economy.”

“The policy priority must now be to expeditiously slow wage and price growth without precipitating a recession,” the IMF said in the Article IV staff report. “This will be a tricky task.”

The Fund said Fed monetary policy tightening should help bring down inflation to 1.9pc by the fourth quarter of 2023, compared with a forecast of 6.6pc for the fourth quarter of 2022.

This will further slow U.S. growth, but the IMF still predicted the United States would avoid recession.

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