Warning of the International Monetary Fund regarding the economic recession in the United States
The International Monetary Fund (IMF) warned on Tuesday that avoiding an economic recession in the United States has become extremely challenging. This institution once again reduced the forecast of US growth in 2022 from 2.9% which was announced in late June (first week of July) to 2.3%. Experts have stated the reason for this is the growth of consumer costs.
The institution also lowered its 2023 real GDP growth forecast to 1.0% from 1.7% on June 24, after meeting with US officials regarding the annual assessment of economic policies.
The executive directors of the International Monetary Fund announced in a statement that the massive increase in inflation poses systemic risks to the US economy and the global economy.
The report of this financial institution states that the first priority of Washington officials should be to quickly reduce the growth of wages and prices without accelerating the recession. However, this action has been evaluated as difficult.
This fund has announced that the tightening of the monetary policies of the “Federal Reserve” (Central Bank of America) should reduce inflation to 1.9% by the fourth quarter of 2023, while the inflation forecast for the same period of this year is 6. It is 6 percent.
International Monetary Fund economist Andrew Hodge said in this regard that the Federal Reserve’s interest rate hike and lower government spending will bring consumer spending growth to near zero by early next year and reduce supply pressures.
He added: The decrease in demand will increase the unemployment rate to about 5% by the end of 2023, and therefore, the reduction of wages should be on the agenda.
The executive directors of the International Monetary Fund, in their policy versions for the US government, called for the approval of the stopped plans of the President of this country, “Joe Biden” for social and climate programs, and have announced that these plans have increased labor force participation, which in turn reduced the inflation rate. and at the same time facilitates the process of transition to a carbon-free economy.
In the report of the Fund, it is also recommended to cancel the trade restrictions and tariff increases that were applied in the last five years.
With growing concerns about gas supplies to Europe next winter and the decision by the US central bank to raise interest rates to combat rising inflation, world economists are no longer optimistic about the future of the Western economy.
Last week, the Goldman Sachs economic institute increased the risk of the US entering recession from 15% to 30% and predicted the risk of entering recession for the next two years at 48%.