IMF: Biden plan will have global “positive repercussions”

The stimulus package for the US economy will radiate outside the borders of the United States, but the risks of inflation and a sharp tightening in interest rates are not excluded.

By pumping $ 1.9 trillion in, the US bailout plan, signed Thursday by Joe Biden from the Oval Office, will have “positive repercussions on the rest of the global economy,” said Jerry Rice, a State Department spokesman. International Monetary Fund (IMF) during a press conference.

He explained that “most countries should benefit from the strong US demand for both goods and imports of goods and services,” adding that “this will therefore contribute to growth and recovery. Global.”

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As a result, the Washington Foundation is expected to publish an upward-revised global growth forecast on April 6.

In January, he was already expecting more sustainable global growth, at 5.5%, thanks to accelerated vaccination and massive aid schemes from governments.

Regarding the single US economy, it was based on 5.1%.

If the United States is to play the role of the global locomotive this year, and perhaps even before China, “we must be aware of the risks and countries must of course be vigilant (…) for any potential danger, including possible fiscal tightening,” but the spokesman warned. In the name of the fund.

Emerging countries

According to him, a sudden tightening of interest rates is not excluded.

In an environment where “US dollar financing costs are exceptionally low,” he added, the Fed and other central banks in advanced economies should “manage the risks of sudden tightening of financial conditions.” Communicate clearly. “

With an asynchronous economic recovery around the world with emerging countries lagging behind, if developed countries raise interest rates sharply, this would hurt the need to refinance the debts of a number of emerging countries.

Inflation

In the US, the Biden plan is expected to boost growth by 5 to 6% over three years, according to a preliminary estimate from the International Monetary Fund that will be revised since the law was passed.

The Republicans, who voted as a bloc against the plan, raised the risks of inflation.

“It’s one of the many risks we’ll be watching,” White House economic adviser Brian Deiss responded to CNN on Thursday.

Even before the vote, some economists indicated that a massive infusion of money into the US economy, when the recovery began, could lead to overheating.

The controversy is not settled even if the majority of economists, including Gita Gopinath, chief economist at the International Monetary Fund, believe that if there is accelerating inflation, higher than the 2% recommended by the US central bank, that will only be temporary. .

For now, the priority is “to implement the recovery plan to achieve a rapid and fair recovery,” said Mr. Deiss, while the crisis is far from over for the poorest families.

He said checks of $ 1,400 per person would start coming out early this month.

He added that the Biden administration “hopes to see strong growth (…) this year and this is what we need to return to full employment more quickly and get out of this very dangerous job gap in which we find ourselves.”

Congress finally approved the bailout bill on Wednesday.

Brian Dacey recalls that more than 10 million Americans, depending on the exceptional unemployment benefits, will continue to benefit from them until September when that assistance was due to expire this weekend.

During the first week of March, 712,000 people were still registered as unemployed compared to 754,000 the previous week, according to the Labor Ministry.

Adviser Joe Biden admitted it was “unfortunate” that Republicans vote against the law, but said the plan had the support of the American people.