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IMF sees significant downside risks for US economy growth in 2022 — IMF Chief

IMF Managing Director Kristalina Georgieva noted that, the US economy is unlikely to avoid a recession
IMF Managing Director Kristalina Georgieva AP Photo/Jose Luis Magana
IMF Managing Director Kristalina Georgieva
© AP Photo/Jose Luis Magana

WASHINGTON, June 25. /TASS/. Experts of the International Monetary Fund (IMF) think that there are significant downside risks for the US economy this year and especially next year, IMF Managing Director Kristalina Georgieva said presenting the annual report on the state of the American economy in Washington.

"We see very significant downside risks [in the US economy] this year and especially next year," she said. Georgieva noted that, according to the baseline scenario, which is being considered by the IMF, the US economy is unlikely to avoid a recession.

High energy prices pose risks to the global economy and also affect the pace of its development, Georgieva told.

"Where we see the snaring path ahead it and what are the biggest risks any of course, high energy prices. This is a risk for US economy and for the world economy as a whole. Not only because it affects inflation, but because it has a broader consequences for growth prospects. When we look at the potential for some withdrawal of oil supply, that of course, could create an it does create further pressure on oil prices," the head of IMF said.

According to her, the IMF assessed "what could that result into."

"We do see the need for a policy that would prevent further upward pressure on oil prices," she said. Georgieva added that many developing countries were in a very difficult situation under the current circumstances.

Georgieva said she had discussed with US Treasury Secretary Janet Yellen the importance of implementing policies that help keep this upward pressure on oil prices under control as much as possible.

The Fund's Managing Director also stressed that the situation around food in the world next year could become worse than this year, not only because of what is happening in Ukraine, but also because of crop failures in a number of countries.

IMF finds it important to fight inflation in the US to bolster growth prospects for the future, but the necessary government action can affect US consumers in the short term, Georgieva told.

"I want to say something that sometimes is left unthought and it is the importance to fight inflation today. This is a top priority for a reason because if we don't secure price stability, it would be negative for growth and it will be negative for incomes will affect people. It will affect families dramatically. So, it is an important step to be taken and success. Over time will be beneficial for global growth. But some pain to get to that success can be a necessary price to pay," she said.

She declined to comment on the US Supreme Court's decision to strike down federal guarantees for abortions. Georgieva only noted that gender equality benefits the economy.

On Friday, the IMF cut its 2022 growth forecast for the US economy by 0.8 percentage points to 2.9%. For 2023, the IMF lowered its forecast from 2.3% to 1.7% and now expects growth of 0.8% in 2024. In October last year, the similar forecast of the fund for the current year was 5.2%.