Economic Buzz: US economy will continue to grow strongly in 2026 and 2027, says IMF

Kristalina Georgieva, Managing Director, IMF, has noted that a buoyant US economy will continue to grow strongly throughout this and next year. In 2025, growth reached 2.2 percent on a fourth quarter to fourth quarter basis, despite significant swings in trade during the year and a sizable drag from the government shutdown in the fourth quarter. Unemployment has remained relatively low, the rate of participation in the labor force by prime-age workers has been rising, and real incomes have been increasing -- and this is so good news.

She noted that the unemployment rate is likely to fall somewhat to around 4 percent in 2026. Inflation has remained around 3 percent throughout 2025, although services inflation has been steadily falling. Goods inflation has been somewhat affected by tariffs, but the fund expects that to wane and for inflation to return to the Federal Reserve's 2 percent target by early 2027.

However, she opined that tariffs have a negative supply effect in the US, and this has added to goods inflation. This is the reason why the IMF is encouraging the US to work constructively with its trading partners to address these mutual concerns and agree on a coordinated reduction in distortions and trade restrictions that are adding to these global imbalances.

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