IMF is warning of hard landing within the domain of possibilities for the U.S. thrift

April 13, 2023: On Wednesday, the IMF warned that a U.S. economic downturn remains “as the realm of possibilities” despite motivating data to the upside.

Gita Gopinath, the IMF’s initial deputy managing director, said the fund had been stated by the strength of the U.S. labour market and consumer spending, prompting it to revise its economic growth forecasts for the country.

Her statements came right after the recent U.S. inflation data showed signs of cooling.

“If you look at the very recent data, you see a few signs of softening,” Gopinath told in Washington, D.C.

“That allows us to avoid a recession,” she said.

The IMF on Tuesday released its recent World Economic Outlook report, which stated that it witnessed the U.S. economy expanding by 1.6% this year, increasing from the 1% forecast in 2022.

Still, Gopinath stated that the economy remains precarious, with little room for error.

“If you look at our growth numbers, we’re looking at meagre growth numbers for the U.S., and so the issues of a hard landing remain,” she said.

Asked if a shift from growth to low or even negative growth could be prompted by the Federal Reserve’s ongoing interest rate hikes, Gopinath said it was conceivable.

“It is within the possibilities that events of this kind could happen,” she stated.

Hence, she added that central banks have been striking a good balance.

“This is a tough time for central bankers,” Gopinath stated. “I think, Hence, the Fed has been correct regarding keeping its eye on inflation and adjusting depending upon how the data comes in.”