IMF: US Economy To Pick Up Steam, But Dangers Remain
The U.S. economy should pick up steam in 2013, so long as the European debt crisis and rising gas prices do not derail the recovery, according to the International Monetary Fund (IMF). The IMF upped its projections for U.S. economic growth Tuesday, now expecting it to grow 2.4 percent in 2013, up from 2.1 percent expectations in January.
While expectations are also up slightly for the global economy and in Europe, IMF officials made clear that challenges remain, and advanced economies like the U.S. are not expected to rocket to huge new growth anytime soon.
“For the past six months we’ve been on a rollercoaster ride,” said Olivier Blanchard, chief economist for the IMF. “Our baseline is that growth is going to be slow in advanced economies; sustained, but not great, in emerging market and developing economies. But the risk of things turning bad again in Europe is high.”
The IMF expects the global economy will grow 4.1 percent next year compared to 3.5 percent this year. Meanwhile, the IMF anticipates while Europe will grow just 0.9 percent — both up 0.2 percent from January projections for 2013.
The IMF has said it is heartened by steps Europe has taken to contain its debt crisis, but IMF Director Christine Lagarde has warned that “risks remain high [and] the situation fragile.”
Beyond addressing the immediate crisis, the IMF has called on established economies to take steps over the medium term to whip their budgets into shape, but cautioned that those steps should not be so extreme as to endanger the fragile, ongoing recovery.