Recession: US economy will ‘narrowly survive’ recession in 2022 and 2023: IMF

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US economy Likely to slow down in 2022 and 2023, but will “avoid a recession” federal Reserve The International Monetary Fund said it implements its rate-tightening plan to curb inflation.

“The policy priority now should be to rapidly slow down wage and price increases without the onset of a recession” International Monetary Fund said in a statement on Friday. “This will be a difficult task,” as global supply shortages and domestic labor shortages are likely to persist, and the war in Ukraine creates additional uncertainty, it said.

Managing director Kristalina Georgieva told reporters after issuing a closing statement on her article, saying the Fed’s plan to quickly get its benchmark rate down from 3.5% to 4% should “tighten financial conditions that allow inflation to quickly hit the target.” Will bring it back.” IV. IMF’s assessment of economic and financial development of countries after consultations, meetings with parliamentarians and public officials.

Georgieva said based on the policy path outlined at the June Federal Open Market Committee meeting and the expected reduction in the fiscal deficit, the IMF expects the US economy to slow down. The fund has “just ended a very fruitful set of discussions” with Treasury Secretary Janet Yellen and Fed Chair Jerome Powellhe said.

“We know there is a narrow way out” recession In America,” Georgieva said. “We also have to recognize the uncertainty of the current situation.”

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Georgieva said at a Friday press conference that there are “very significant” downside risks this year, and especially in 2023.

Nigel Chalk, deputy director of the IMF’s Department of the Western Hemisphere, said that if a recession does eventually occur, it will be relatively short.

Policymakers raised interest rates by 75 basis points last week – the biggest move since 1994 – and Powell indicated that another increase of the same magnitude or 50 basis points was on the table for July.

The Fed chief and his allies have aggressively pivoted to fight the highest inflation in 40 years amid criticism that they left monetary policy too easing for too long as the economy recovers from Covid-19. They have increased rates by 1.5 per cent this year and officials project a cumulative tightening of around 1.75 points in 2022.

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Since Russia’s invasion of Ukraine in February, global oil prices have risen dramatically, fueling inflation, fueled by supply-chain disruptions related to the pandemic and, especially in the US, the fiscal deficit of COVID-19. was impressed by the response.

At the press conference, Georgieva said the IMF sees the need for a policy that could prevent further pressure on oil prices, something she discussed with Yellen this week.

Noting that US price pressures are now broad-based and go well beyond increases in energy and food prices, Georgieva said Yellen and Powell “left no doubt” as to their commitment to bringing inflation back.

One suggestion from the IMF to ease inflationary pressures is for the Biden administration to roll back tariffs it imposed on steel, aluminum and a range of Chinese goods over the past five years. President Joe BidenThe U.S.’s trade chief, Catherine Tai, has previously said that tariffs on more than $300 billion in annual US imports of Chinese products provide significant benefits and are useful from a negotiating standpoint.

The IMF supports the Biden administration’s so-called build-back-better agenda, saying it will help address supply-side barriers, improve safety nets, support labor force participation, and encourage investment and innovation. will help.

“The failure to pass the package in Congress “represents a missed opportunity,” Georgieva said.

“The administration must continue to pursue changes in tax, spending and immigration policy, which will help create jobs, increase supplies and support the poor,” he said.

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