By David Lawder
WASHINGTON (Reuters) – The International Monetary Fund may need to raise its forecast for U.S. growth after better-than-expected third-quarter GDP data, a senior IMF official said on Wednesday, but the rate hike by Federal Reserve is starting to cool demand, especially in housing.
Nigel Chalk, acting director of the Fund’s Western Hemisphere department, told Reuters in an interview that the IMF’s latest World Economic Outlook forecasts of 1.6% real US GDP growth in 2022 assumed a lower outcome for the third quarter than the 2.6% annual growth rate reported last week by the Commerce Department.
“It was a strong report. It was definitely a stronger third quarter than we had in our forecast in the October report, so in that sense there is an upside,” Chalk said.
But he said US GDP has been extremely volatile this year, coming off a 0.6% contraction in the second quarter, with third-quarter data buoyed by an unusually large contribution from net exports, along with a large backlog of stocks.
In its Oct. 11 report, the IMF had cut its US growth forecast by 0.7 percentage point, based on the weak second quarter result of this year. Along with other factors such as rising food and energy costs generated by Russia’s war in Ukraine and tighter monetary policy, reductions in the US offset positive surprises in Europe, leaving the IMF’s 2022 global growth forecast static at 3. ,two%.
But Chalk said the third-quarter data reflected a shift in American consumption patterns that could have negative effects in other countries, such as a return to spending on services such as travel, restaurants and health care away from pandemic-induced demand for imported goods.
“I think this recomposition of demand in the US is a very important feature. Going into next year, the US is slowing down and that is never good for the global economy,” Chalk said. “In addition to slowing down, it’s moving away from consumer goods, and that’s kind of exacerbating the effect on the global economy.”
(Reporting by David Lawder; Additional reporting by Rodrigo Campos)
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