Market news
02.07.2021, 06:40

The International Monetary Fund raises U.S. 2021 growth forecast to 7%

Reuters reports that the International Monetary Fund raised its 2021 U.S. growth projection sharply to 7.0% due to a strong recovery from the COVID-19 pandemic and an assumption that much of President Joe Biden's infrastructure and social spending plans will be enacted.

The IMF's latest forecast, marking the fastest U.S. growth pace since 1984, compares with an April projection of 4.6% growth in 2021. The Fund raised its 2022 U.S. GDP growth forecast to 4.9%, up from its previous 3.5% April forecast.

The new forecasts, contained in the IMF's annual assessment of U.S. economic policies, assume that the U.S. Congress will pass the Biden administration'sAmerican Jobs Plan and American Families Plan infrastructure, social spending and tax reform plans this year at a size and composition similar to their original proposals.

The IMF forecast came shortly after the Congressional Budget Office offered a similarly optimistic forecast for the U.S. economy this year. The non-partisan CBO's forecast makes no assumption about the fate of Biden's spending plans and is based only on current laws. read more

The Fund added that it expects U.S. inflation expectations to remain well-anchored, but these "will be obscured in the coming months by significant, transitory movements in relative prices," which could cause personal consumption expenditure inflation to peak temporarily near to 4% later this year.

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