Global rating agency Fitch Ratings has warned that there could be a recession like the 1990s in the US. In the year 1990, the US economy went into recession, which lasted about 8 months. During this time the unemployment rate had increased significantly.
Fitch said that high inflation and aggressive rate hike by the US Federal Reserve could push the US economy into a similar recession once again by this spring season (March to May).
With this, Fitch has also reduced the US GDP growth forecast for the current and next fiscal years. The rating agency said that the US economy is expected to grow at just 0.5 per cent this year. At the same time, its growth rate can be 1.5 percent in the next financial year.
Fitch said that inflation is increasing the burden on the pockets of the people of America and due to this, consumer spending is continuously decreasing. The agency said that by the second quarter of 2023, due to this, the US economy may also see a decline.
Also read- Share Market: Sensex jumped 1,725 points in last 3 days, investors’ capital increased by Rs 5 lakh crore
However, Fitch also said that the impact of this recession is going to be less than the last two recessions, which can be a matter of relief for America. “The US recession we expect is going to be very mild,” said economists at Fitch Ratings.
US President Joe Biden also acknowledged the possibility of a recession in America last week. Biden said there could be a recession in America. However, he simultaneously dismissed the possibility of America getting caught in a big crisis due to the recession. He said a recession could happen, but the slowdown in the economy would be very mild. He also said that the US economy has enough capacity to overcome this crisis.
Pierre-Olivier Gourinchas says that this year’s shock to the economy will revive the wounds that began to heal after the corona epidemic. He said that bad times are yet to come for most of the people. There will be a recession like situation in 2023.
He has written these things in an article. This article is part of the IMF World Economic Report. In the World Economic Outlook Update, the IMF has kept its GDP growth forecast for 2022 at 3.2 per cent. But, it has lowered its growth forecast by 0.20 per cent to 2.7 per cent in 2023.