Strong economic growth in the United States has significantly influenced global economic performance, according to U.S. Treasury Secretary Janet Yellen.
In anticipation of the upcoming meeting of G20 finance officials in Sao Paulo, Brazil, Yellen will emphasise this point at a news conference on Tuesday.
Yellen, as per excerpts released by the Treasury, highlighted that contrary to projections by the International Monetary Fund (IMF) and other forecasters, there was no widespread slowdown in the global economy in 2023.
Instead, global growth reached 3.1%, surpassing expectations, and inflation decreased, with an anticipation of further declines in prices across approximately 80% of economies this year.
Looking ahead, Yellen acknowledged the importance of remaining vigilant towards potential risks to the global outlook but asserted that the global economy maintains its resilience.
She attributed much of this resilience to the robustness of the U.S. economy, supported by policies implemented by the Biden administration aimed at aiding businesses affected by the COVID-19 pandemic, along with investments in domestic manufacturing, clean energy, and infrastructure.
Yellen noted the significant decline in U.S. inflation from its peak and highlighted the historically strong U.S. labour market, with the prime-age labour force surpassing pre-pandemic levels and the unemployment rate hovering near historic lows.
Highlighting the pivotal role of the U.S. economy, Yellen remarked, “Had a U.S. recession come in 2023, like many predicted, global growth would have been thrown off track.
While there are risks to our outlook, America’s growth has consistently exceeded projections.”
The IMF’s recent adjustment of its global growth outlook to 3.1% in 2024, slightly higher than its previous forecast, suggests a positive trajectory.
However, Pierre-Olivier Gourinchas, the IMF’s chief economist, cautioned that overall growth and global trade remain below historical averages.
Yellen also acknowledged the contribution of other economies, such as Brazil, to global growth but noted that certain economies still face challenges.
The IMF, through spokesperson Julie Kozack, indicated its consideration of new information concerning the economies of Japan and the United Kingdom, both of which slipped into recession, as it prepares to release a new global forecast in April.