The United States (US) growth forecast for 2022 was further lowered from 2.9% to 2.3% by the International Monetary Fund (IMF) ahead of tonight’s reading of inflation data.
The decision to reduce the percentage was made based on weak June consumer spending data.
In addition, the gross domestic product (GDP) growth forecast for 2023 was also lowered from 1.7% to 1.0%.
The IMF commented that the situation was ‘increasingly challenging’ for the US to avoid a recession as the final revised report reflected a decline in GDP in the first quarter and weak consumer spending during May.
Among the main highlights of the 'challenges' are of course the surge in inflation and the increase in interest rates by the Federal Reserve (Fed) in controlling prices.
This is because inflation will trigger systemic risks to the US and the world economy.
That string, the policy priority for now is to slow wage and price growth without triggering a recession.
In general, the tightening of monetary policy will lower inflation to 1.9% in the 4th quarter of 2023 compared to the forecast of 6.6% for the 4th quarter of 2022.
It is expected to further slow US growth but the IMF predicts such action could avert a recession.
