The International Monetary Fund (IMF) in its latest April 2023 release estimated growth for the US economy in 2023 of 1.6% y/y, an improvement of 0.2 percentage points from its projection last January.
One factor in this advance is due to the resilience of domestic demand.
For 2024, the international organization projects a growth of 1.1%, associated with the greater impact that monetary policy will have during that year on the economy, with an improvement of 0.1 percentage points compared to the immediate previous projection of January.
In 2022, US GDP recorded annual growth of 2.1 percent.
The main components contributing to this growth were private consumption in services, private investment, and net exports of goods.
In particular, gross fixed investment presented a 4.0 percent annual growth due to the non-residential and inventory components that grew 3.9 and 5.3 percent, respectively, despite tighter financial conditions.
On the contrary, residential investment registered a negative contribution to GDP affected by the restrictive monetary policy of the Federal Reserve (Fed).
US economy
Although the risk of a mild and short-lived recession in the United States persists in 2023, timely indicators such as private consumption, employment and manufacturing production surprised to the upside in January showing signs of strength.
From the Mexican government’s perspective, these indicators, among others, point to real GDP growth in the first quarter of 2023 that is higher than expected at the beginning of the year and above the historical average growth from 2010 to 2019.
Meanwhile, based on preliminary figures in March 2023, the composite Purchasing Managers’ Index (PMI) stood at 53.3 points, i.e., for the second consecutive time above the minimum expansion threshold, suggesting positive growth in economic activity at least during the first few months of the year.
The Fed has raised interest rates to combat inflation, and has indicated that the pace of rate hikes may slow in the future.
The focus going forward will be on the extent to which economic growth, the government deficit and public debt affect the Fed’s ability to raise rates in the future or shrink its balance sheet.
