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IMF’s Gopinath says high U.S. deficits fueling demand, global growth, higher rates & USD

First Deputy Managing Director of the International Monetary Fund, Gita Gopinath addressed a fiscal forum at the IMF and World Bank spring meetings on Saturday:

  • said that US deficits are projected to rise for years with one of the world’s steepest curves for debt
  • “The high levels of deficits are also supporting growth and demand in the U.S. that have positive spillover to the rest of the world,”
  • “But along with that growth, you’re getting higher interest rates and a stronger dollar and the second two are creating more complications for the world.”

IMF’s estimates that the U.S. deficit for 2024 will reach 6.67% of GDP, rising to 7.06% in 2025 (which is double the 3.5% number in 2015).

Gopinath said the IMF’s annual “Article IV” review of US economic policies will be complete in coming weeks, it’ll recommend that the US

  • raise tax revenues
  • reform costly Social Security and Medicare programs

to bring deficits lower.

Well, that won’t happen in an election year.

This article was written by Eamonn Sheridan at www.forexlive.com.

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