Kristalina Georgieva, Managing Director of the International Monetary Fund (IMF), affirmed that the US economy is on a steady path to recovery this year, supported by a resilient labor market and business growth. These remarks came during an interview with Fox Business Network, where she noted that the IMF expects unemployment rates to remain low, hovering around 4%, a positive indicator reflecting the ability of the world's largest economy to generate jobs despite global challenges.
Indicators of labor market and company growth
Georgieva explained that the anticipated recovery depends not only on overall figures but also on a significant surge in new business creation, which will directly contribute to job creation and foster innovation. However, the IMF's Article IV review of the US economy highlighted structural shifts in the labor market; employment growth is expected to remain below half of pre-pandemic levels due to the natural slowdown in population growth, a demographic factor with long-term implications.
Challenges of fiscal deficits and sovereign debt
Despite its optimistic outlook for growth, the International Monetary Fund (IMF) issued stark warnings regarding US fiscal policies. In its economic policy recommendations, the IMF indicated that the US fiscal deficit would remain high, ranging between 7% and 8% of GDP in the coming years. This figure is alarmingly high, exceeding by more than double the levels targeted by the US Treasury Department.
Regarding debt, the IMF charted an upward trajectory for aggregate government debt, projecting it to reach a record high of 140% of GDP by 2031. This rise in debt puts additional pressure on policymakers to adopt more disciplined fiscal policies to ensure long-term fiscal sustainability.
Inflation and economic growth prospects
Regarding inflation, which has been a major concern for global markets, the IMF predicted a gradual path toward stabilization, with core inflation likely to reach the target of 2% by early 2027. In parallel, the US economy is expected to grow at a steady pace of 2.4% in 2026, in line with the World Economic Outlook report.
Global impact of the US recovery
This economic recovery in the United States has far-reaching implications beyond its borders. From an international economic perspective, the stability of the US economy is a key driver of global growth, boosting demand for exports from emerging markets and partner countries. However, the persistently high current account deficit, projected to range between 3.5% and 4% of GDP, and the increasing reliance on external borrowing could lead to a continued strong dollar, posing challenges for developing economies burdened with dollar-denominated debt.
