Goldman Sachs Lowers US Growth Forecast to 1.75%... Recession Risk Increases

[Asia Economy New York=Special Correspondent Joselgina] Global investment bank Goldman Sachs has lowered its forecast for the US economic growth rate this year from the previous 2.0% to 1.75%.

According to MarketWatch and others on the 11th (local time), Goldman Sachs stated in a report released the day before, "This forecast suggests that the first and second quarters of this year will fall below potential growth rates," thus lowering the annual forecast.

This judgment is based on the significant economic impact such as the sharp rise in oil prices following Russia's invasion of Ukraine. Goldman Sachs predicted that high oil and agricultural product prices will reduce Americans' real disposable income by 0.7 percentage points this year.

It also expected not only a negative impact on consumer sentiment but also that the downward revision of Europe's growth forecast would hurt US exports. Fiscal tightening was also pointed out as a factor burdening US growth.

The possibility of entering a recession has also increased. Goldman Sachs stated, "The risk of the US entering a recession next year is approximately 20 to 35%."

This report came as the International Monetary Fund (IMF) announced it would revise down its global economic growth forecast considering the impact of the Ukraine war and international sanctions against Russia. Kristalina Georgieva, IMF Managing Director, said the day before that a Russian debt default declaration is no longer an impossible scenario.

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