The International Monetary Fund (IMF) said last Thursday, June 27, that the United States currently has too big a fiscal deficit, and this country is burdened with too much debt.
The mentioned organization also warned that various dangers are forming against the background of Washington’s aggressive trade policy concept. The IMF described the economic system of the United States as robust, dynamic, and adapted, but at the same time made critical comments on the strategy of actions of the country’s leadership in the relevant dimension of the existence of the state.
The fund predicts that in the current year, the US economy will show growth of 2.6%. It is worth noting that the previous version of this forecast, published in April, provided that the mentioned indicator would be 2.7%.
IMF staff, in a summary of their annual evaluation of the United States economy, stated that the fiscal deficit is too large, which is why a steady tendency is being formed towards an increase in the ratio of public debt to gross domestic product (GDP). They also noted that the continued implementation of Washington’s policy of scaling up trade restrictions and insufficient progress in the context of efforts to eliminate vulnerabilities recorded during bank failures last year generate serious risks for the economy.
The media draws attention to the fact that the IMF has recently shown an increasingly critical attitude in the context of assessing the condition and the prospects for the economic policy of the United States. In the relevant context, the organization’s experts say that unstable borrowing volumes and competition with China generate risks for the global economy.
US Treasury Secretary Janet Yellen, meeting with IMF Managing Director Kristalina Georgieva, confirmed the importance of frank and thorough assessments of all IMF member economies.
The nonpartisan Congressional Budget Office this month revised its estimate of the United States fiscal deficit upward by 27% to almost $1.92 trillion. Currently, the ratio is estimated at 6.7% in the 2024 fiscal year, which runs until September. It is worth noting that in the European Union countries, there is a rule to keep the shortfalls at 3% or less.
The IMF predicts that if the current configuration of Washington’s economic policy is maintained, by 2032 the United States general government debt will exceed 140% of GDP.
Kristalina Georgieva, during a speech at a press briefing on Thursday, said that the foundation expects that US inflation will continue to be on a downward trajectory, returning to the Federal Reserve’s target of 2% next year. Also in this context, it was noted that the United States financial regulator should keep interest rates at the current level at least until the end of 2023. Kristalina Geogrieva stated that this year there is potential for one lowering of the cost of borrowing.
As we have reported earlier, IMF Lifts China Growth Forecast.
