IMF Flags Economic Strains Amid US Shutdown and Trade Turmoil

The IMF highlights challenges in assessing the U.S. economy due to a government shutdown and policy uncertainties. Economic growth is expected to fall short of previous forecasts. However, resilience is anticipated in early 2026, aligning with historical recovery patterns following U.S. shutdowns. Inflation risks complicate Federal Reserve decisions.

The International Monetary Fund (IMF) is observing mounting economic strains in the U.S., which are expected to result in a slower growth rate for the fourth quarter. This is attributed to a lack of data caused by the prolonged government shutdown, as stated by IMF spokesperson Julie Kozack in a Thursday briefing.

The shutdown has led to the delay of the IMF's annual "Article IV" policy consultations with U.S. authorities, with no new schedule set. The U.S. economy has shown resilience, yet domestic demand and job growth are weakening, compounded by declining immigration inflows, tariffs, and policy uncertainty weighing down economic activity.

Inflation, although slowing, presents upside risks, further complicating Federal Reserve policy decisions. As the U.S. prepares to assume the G20 presidency in 2026, financial discussions, particularly surrounding debt vulnerabilities, remain paramount, underscoring the importance of international cooperation as highlighted during recent meetings.

(With inputs from agencies.)