IMF head Kristalina Georgieva has estimated that the United States is currently on a "narrowing path" to recession in 2022 and 2023 as it faces economic hardships in the wake of the pandemic aftermath and sanctions imposed on Russia.
The gloomy assessment has been made in an annual report on US economic policy.
"Based on the policy path outlined at the June FOMC [Federal Open Market Committee] meeting, and an expected reduction in the fiscal deficit, we expect the US economy will slow. We are conscious that there is a narrowing path to avoiding a recession in the US," the IMF said in its statement, noting that it recognizes "the uncertainty of the current situation."
Georgieva further acknowledged that "the potential for future shocks" can make the situation "more difficult", with the US economy having to brace for hard times despite several positive accomplishments from the Biden administration, such as recovering from COVID-19 and creating additional jobs.
The IMF forecasts that US economic growth will drop from 2.3 percent to 1.7 percent in 2023, plummeting further to 0.8 percent in 2024.
The IMF’s dismal predictions come as Goldman Sachs echoed the sentiment, doubling the chances of the US entering recession from 15 to 30 per cent. According to the investment giant, the probability of recession over the next two years stands at 48 percent.
The United States economy, like that of many western countries that imposed sanctions on Russia over its military operation in Ukraine, is currently weathering skyrocketing inflation. As Washington attempts to tackle its 8.6% inflation, the Eurozone has reported a year-on-year inflation of 8.1%, and the United Kingdom eclipsed its inflation rate of 9.1%.