The International Monetary Fund (IMF) has raised alarms in its latest report about the United States' soaring fiscal deficit, highlighting it as a significant threat to the global economy.
According to the IMF's benchmark Fiscal Monitor, the U.S. fiscal deficit is projected to hit 7.1% of its GDP next year. This figure starkly contrasts with the average deficit of 2% seen in other advanced economies.
Last year, the U.S. experienced a considerable fiscal slide, with the deficit ballooning to 8.8% of GDP, more than double its 2022 levels. In comparison, advanced economies like those in the eurozone managed to keep their deficits under control.
IMF chief economist Pierre-Olivier Gourinchas emphasized that the U.S. budget stance poses longer-term fiscal and financial stability risks for the world economy. Additionally, IMF Managing Director Kristalina Georgieva expressed concern over the strengthening dollar, driven by high U.S. interest rates.
The IMF warns that a sudden sharp rise in U.S. interest rates could trigger a surge in global government bond yields and cause currency fluctuations in emerging and developing economies. This global spillover effect could tighten financial conditions worldwide, increasing risks for other nations.
The report identifies the U.S. as one of four countries that critically need to address the imbalances between spending and revenue to mitigate these risks.
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IMF: U.S. fiscal deficit poses 'major risk' to global economy
cgtn.com
