IMF criticise US budget cuts
The significant federal budget cuts implemented by the US at the beginning of this year have come under criticism from the International Monetary Fund (IMF) who called US plans reducing the economic deficit “excessively rapid and ill-designed”.
In the IMF annual report on the US economy, the considerable budget cuts were blamed for impeding economic recovery by as much as 1.75% this year. A growth forecast of 1.9% demonstrates slow improvement and the IMF argue that if tax increases and spending cuts had been brought in more slowly, the forecast could have reflected 3.65% growth. The IMF forecast growth of 2.7% for next year.
The advice given to the US with regard to their medium-term growth is “slow down but hurry up”. Although this sounds like contradictory advice, IMF are making the point that starting off slowly and easing into financial changes will ultimately benefit in the long run in terms of growth and stability.
Overall the US economy has met with approval from the IMF, with the housing market recovering more quickly than expected and the jobs market looking set to expand in the latter half of this year. In addition, the prospering US energy market and investments in business are contributing to the gradual recovery of the US economy as a whole.