The IMF has warned the US that its massive fiscal deficits have stoked inflation and pose “significant risks” for the global economy.
The fund said in its benchmark Fiscal Monitor that it expected the US to record a fiscal deficit of 7.1 per cent next year — more than three times the 2 per cent average for other advanced economies.
It also raised concerns over Chinese government debt, with the country set to record a deficit of 7.6 per cent in 2025 — more than double the 3.7 per cent average for other emerging markets — as Beijing copes with weak demand and a housing crisis.
The US and China were among four countries the fund named that “critically need to take policy action to address fundamental imbalances between spending and revenues”. The others were the UK and Italy.
Rampant spending by the US and China in particular could “have profound effects for the global economy and pose significant risks for baseline fiscal projections in other economies”, the IMF said.
The assessment comes amid mounting concerns among economists and investors that 2025 will prove a crunch year for US fiscal policy.
The presumptive Republican presidential nominee Donald Trump has pledged to make his 2017 tax cuts permanent, a move the Committee for a Responsible Federal Budget think-tank expects to cost $5tn over the next decade. Democrats have been accused by Republicans and economists of doing too little to cut “discretionary spending” on healthcare and social security.
On Tuesday, IMF chief economist Pierre-Olivier Gourinchas said… Read more
@ISIDEWITH4wks4W
@ISIDEWITH4wks4W
@ISIDEWITH4wks4W
Would you support higher taxes or reduced government spending if it meant stabilizing the country's economy and protecting global financial health?
Yes, because taxation is theft and government shouldn't spend on anything but what is absolutely necessary to defend the rights to life, liberty, and property (i.e. – courts, police, military, and very little else).
@9LM78HS4wks4W
We're all in it together. Something has to give for something else to go better.
@9LM72RB 4wks4W
I personally wouldn't mind paying higher taxes if it meant our basic right to healthcare was covered, but this will only work if the wealthy few start actually paying their dues when it comes to taxes.
@ISIDEWITH4wks4W
What moral responsibility, if any, do countries have to maintain financial stability to avoid negatively impacting the global economy?
@ISIDEWITH4wks4W
How would you feel if the money you save today loses its value faster because of another country's debt?
I'd protect myself by buying precious metals.
@9LM6Y8X4wks4W
They need to get their act together so It dosen't suck for us.