He International Monetary Fund (IMF) lowered this Thursday by just one tenth, to 2.6%, its growth forecast for this year for the US economy, which has shown to be “robust, dynamic and able to adapt“, while acknowledging that there is room to graduate the reduction of interest rates and to raise taxes.
“Economic activity and employment continue to exceed expectations, relative to Article IV of 2023, and the decline in inflation has been less costly than feared“the Fund says in the conclusions of its country report for USA presented this Thursday.
(Also: Elections in Uruguay: this is how this Sunday’s vote will be conducted).
The IMF recommended “consider carefully” an increase in indirect taxes, progressively increasing income taxes, even to households earning less than $400,000and eliminate tax benefits and social programs to reduce the deficit.
USA iStock
“Now, when the economy is strong, is the time to address those needs and reverse the trend (in the deficit)“, he said in a press conference IMF Managing Director Kristalina Georgieva.
“The United States is the only G20 economy whose GDP level already exceeds pre-pandemic levels (of covid-19)“, Georgieva said.
(Also: Latin America and foreign policy absent from British election campaign).
He IMF considers that the Federal Reserve must wait for at least “end of 2024” to announce its first interest rate cut, currently at its highest in two decades, but there is “significant room to maneuver“towards price stability, because the effect of restrictive monetary policy has not had a serious effect on employment.
Regarding risks, the IMF pointed out that the high level of fiscal deficit and the ratio between GDP and debt is high, While trade restrictions and banking risks should keep the US government on its toes.
USA EFE
The IMF expects the economy to maintain a GDP growth rate of around 2% until 2029with unemployment stable at around 4% and inflation correcting below 2% next year.
“The US debt is sustainable, but that level has risen and so has the deficit. What we mean is that if they reduce it now they will have a much more solid path in the future.“Georgieva explained.
(Also: Dina Boluarte ends her official trip to China).
Georgieva recalled that the world is going through a period of geopolitical uncertainty and despite the fact that the US has “enough room to maneuver its monetary policy“and inflation”shows clear evidence of returning to the sustainable level of 20%“, risks persist.
The head of the IMF was also critical of the protectionist measures by the United States to protect or develop strategic sectorsespecially against China, although he acknowledged the “negative consequences of globalization“, in general, with the loss of jobs and its effect on the poorest.
United States Economy iStock
However, he recalled that the The US economy has traditionally been open to the world and has benefited from low trade restrictions..
Georgieva recommended “Address these issues through more dialogue with trading partners, as we believe this will be less costly for the United States and the global economy, rather than resorting to tariffs that may lead to retaliation from other trading partners.“.
EFE
