IYY - IMF raises growth outlook for U.S. on stronger-than-expected momentum

2023-10-10 05:12:46 ET

The International Monetary Fund on Tuesday raised its 2023 growth outlook for the U.S. on account of stronger-than-expected momentum in the economy.

Growth forecast for the U.S. in 2023 was raised by 0.3 percentage point to 2.1%, while 2024 outlook was raised by 0.5 pp to 1.5%, according to the IMF's latest World Economic Outlook.

This reflects "stronger business investment in Q2 and resilient consumption growth, a reflection of a still-tight labor market." The general U.S. government fiscal stance is also expected to be expansionary in 2023.

"However, with wage growth slowing, savings accumulated during the pandemic running out, and the Federal Reserve maintaining tight monetary policy, growth is expected to slow in the second half of 2023 and in 2024," the IMF warned .

The outlook assumes that the 10-year government bond yield for will average 3.8% in 2023 and 4.0% in 2024.

The agency reiterated its 2023 global growth forecast of 3%, and bumped up its 2024 outlook by 0.1 pp points to 2.9%, saying "the global economy is limping along, not sprinting."

China's growth forecast was reduced by 0.2 pp to 5% for 2023, and by 0.3 pp to 4.2% for 2024. "With the property market crisis in that country, lower investment is the main contributor to the revision."

Euro area's growth forecast in 2023 was revised downward by 0.2 pp to 0.7%, while its 2024 outlook was cut 0.3 pp to 1.2%.

More on U.S. economy

• Goldman sees higher interest rates trimming GDP growth, but no recession yet
• Govt shutdown will be 'credit negative' on U.S. sovereign rating: Moody's
• United States loses top rating at Fitch; long-term IDR cut to AA+

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