BRICS: IMF Warns US Economy Presents a Global Recession Risk

As the BRICS bloc has continued to embrace de-dollarization, the International Monetary Fund (IMF) has released a report warning that the US economy presents a risk for a global recession. Indeed, the organization has warned the Western nation could be a negative influence on the world economy’s soft landing.

The IMF has expressed concern in the US growth slowing. Moreover, it has noted the continued high inflation only compounds the problem. They ultimately say that the two factors could all but prevent the world from avoiding a global recession.

Also Read: BRICS: IMF Confirms US Dollar Is in Jeopardy

IMF Says US Economy Could Prevent a Global Soft Landing

The BRICS bloc has consistently sought to lessen its exposure to the US dollar, in what could be a smart move, as the IMF has warned the US economy could present a global recession risk. Specifically, they warn the nation’s economy slowing should lead to some worry.

The IMF warns that the world’s economy is in a “sticky spot,” despite projections that global output should stay at 3.2% in 2024. Specifically, they are concerned over potential weaknesses in the US. The country was key in the world’s return from the 2020 pandemic, but has slowed its growth projections.

The IMF has downgraded its growth projection for the United States economy. They had projected 2.7% growth in 2024, from a 2.5% forecast a year prior. However, that has not been changed to a 2.6% growth rate. It is rooted in a cooling labor market that could have a huge effect on the country.

Also Read: BRICS: Expert Says US Economy is ‘in Recession’ as Debt Keeps Mounting

“The United States shows increasing signs of cooling, especially in the labor market, after a strong 2023,” IMF Chief Economist Pierre Olivier Gourinchas, said in a New York Times report. Moreover, they predict inflation throughout the globe to reach 5.9% this year, from 2023’s 6.7%.

Yet, that presents another challenge. The report shares concern that Central Banks would have to keep borrowing costs high to cope with inflation figures. That would then place developing nations further at risk. The inflation prices is a “significant risk to these soft-landing scenario.”

In the United States, the Federal Reserve has yet to reduce borrowing costs. Interest rates have remained at a 23-year high. Many experts are projecting the first cuts won’t come until September, further solidifying the IMF concerns, rooted in massive exposure to the US dollar.