The International Monetary Fund has warned that the United States faces heightened downside risks and has a “narrow path” to avoid recession, and lowered its US economic growth outlook.
In its review of the US economy, the Fund again cut its growth forecast for this economy to 2.9% this year, from 3.7% it announced last April, and also expected growth to slow to 1.7%. next year.
Fund manager Kristalina Georgieva said: “With inflation soaring and interest rates rising by the Federal Reserve, the United States faces an increased risk of economic deflation.
Although Georgieva expressed confidence that raising interest rates would bring down inflation, she said: “We understand there is a narrow path to avoid a recession.”
She cited a number of shocks in the US economy, saying “more negative shocks will inevitably make the situation more difficult.”
Last week, the Federal Reserve implemented the largest increase in its base lending rate in almost 30 years as part of its measures to curb inflation, which reached its highest level in four decades, and increased pressure on American families who are struggling with high prices for gasoline, food and housing.
Source: AFP