US on ‘very narrow path’ to avoid recession, IMF chief economist warns

‘We are cautiously prudent that the US economy could avoid a recession and … glide towards its inflation target. But it’s a very, very narrow path,’ he said

The latest IMF report also noted there are growing risks to China’s economy following its post-pandemic reopening, especially in its troubled real estate sector

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International Monetary Fund chief economist, Pierre-Olivier Gourinchas, warns the US and China about their economies. Photo: AFP

Published: 10:52pm, 25 Jul 2023Updated: 1:39am, 26 Jul 2023

The United States’ economy is on a “very narrow path” to avoiding a recession, the International Monetary Fund’s chief economist says, while warning of risks to China’s strong post-pandemic recovery.

“A recession is not in our baseline,” Pierre-Olivier Gourinchas said during an interview at the IMF’s headquarters in Washington, ahead of the publication of its updated global growth projections on Tuesday.

“We are cautiously prudent that the US economy could avoid a recession and, you know, glide towards its inflation target without having a recession in its future”, he said. “But it’s a very, very narrow path”, he warned.

On Tuesday morning, the IMF raised its forecast for global growth in 2023 to 3.0 per cent, up 0.2 percentage points from its previous forecast in April, citing resilient service sector activity in the first quarter of the year.

The IMF still expects much of the growth this year and next to come from emerging and developing economies, with countries like the United States, Germany and Japan due to grow at a much slower pace than China and India.

But the IMF report also noted there are growing risks to China’s economy following its post-pandemic reopening, especially in its troubled real estate sector.

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