Don’t risk throwing the world’s biggest economy into recession with tax increases and spending cuts.
That was the warning from the global lender the International Monetary Fund as it released its annual assessment of the health of the US economy.
IMF chief Christine Lagarde said politicians should keep up efforts to help the modest recovery: “The US economic recovery remains tepid, and is clearly exposed to potential contagion from an intensification of the euro area debt crisis. We believe that the US authorities do not have a lot of space available but they should use it to support the recovery in the near term and promptly tackle the medium-term challenges both in term of fiscal sustainability and financial sector reform”
As well as advising American lawmakers to raise Washington’s borrowing limit, Lagarde also said the US financial sector is “generally solid” and has been well restructured following the 2007-09 Wall Street banking crisis.
The IMF forecasts the US economy will grow 2.0 percent this year and 2.3 percent in 2013.