‘US labour markets, consumer demand remains strong despite increase in interest rates’

International Monetary Fund Managing Director Kristalina Georgieva said on Thursday that there is mounting evidence that the United States can avoid recession this year and achieve a “soft landing” for its economy.

Georgieva told reporters that US labour markets remain resilient and consumer demand remains strong despite increases in interest rates to fight inflation, reports Reuters.

She said there has been a healthy shift away from excess goods purchases, which had pressured prices, back toward services demand, and there were more diversified sources of growth in the economy.

“It gives some argumentation of an expectation that the US would avoid falling into recession,” Georgieva said during her first news briefing of 2023. “And actually, I would say even if it is in technical terms in recession, that will be a very mild recession.”

She noted that determinations of recessions are normally the subject of intense debate but she said she was leaning toward a soft-landing scenario for the United States.

The IMF in October forecast US GDP growth for 2023 at 1.0 per cent, a projection it will update this month. The World Bank on Tuesday forecast US growth at 0.5 per cent for 2023.