IMF Chief: "Very Low Chance of US Recession"... Growth Forecast Cut by 1.4%P

[Image source=Reuters Yonhap News]

[Asia Economy New York=Special Correspondent Joselgina] Pierre-Olivier Gourinchas, Chief Economist of the International Monetary Fund (IMF), forecasted on the 26th (local time) that it would be difficult for the United States to avoid a recession.

According to major foreign media, Chief Economist Gourinchas made this statement during a press briefing held after the IMF released its revised World Economic Outlook report on the same day. In the report, the IMF lowered its forecast for the U.S. economic growth rate this year to 2.3%. This is a significant 1.4 percentage point drop from the forecast of 3.7% made just three months ago.

Chief Economist Gourinchas diagnosed, "The current environment suggests that the likelihood of the U.S. avoiding a recession may be very low. This will be a very narrow path." He also warned that even a small shock could tilt the U.S. into a recession.

The IMF cited low growth rates, reduced household purchasing power, and tight monetary policy as the reasons for the downward revision of the U.S. growth forecast this year. Furthermore, it pointed out that if a recession is defined as two consecutive quarters of negative growth, the U.S. recession may have already begun.

This contrasts with the stance of the Biden administration, including President Joe Biden, which argues that even if two consecutive quarters of negative growth materialize, it cannot be defined as a recession based on a strong labor market. The Atlanta Federal Reserve Bank’s GDPNow, which compiles real-time data, estimated on the 19th that the U.S. GDP growth rate for the second quarter would be -1.6% annualized.

On the same day, Chief Economist Gourinchas predicted that if the U.S. monetary tightening policy continues, the unemployment rate, currently at 3.6%, will rise, and the labor market will gradually cool down.

In this revised forecast, the IMF projected that the global economy will grow by 3.2% this year. This is 0.4 percentage points lower than the forecast of 3.6% released in April. Compared to last year's 6.1%, it is close to half the level. For 2023, the global economy is expected to grow by 2.9%, which is 0.7 percentage points lower than the previous forecast of 3.6%.

The IMF stated, "The risks to the outlook are overwhelmingly tilted to the downside," citing major risks such as the sudden halt of Russian gas imports in Europe, debt in emerging and developing countries due to monetary tightening in major countries, China's economic slowdown, and geopolitical fragmentation.

This content was produced with the assistance of AI translation services.