IMF Flags Mounting US Debt as Broadening Threat to Economic Stability

(MENAFN) The International Monetary Fund indicated on Wednesday that while economic expansion in the United States is set to accelerate this year, the country’s increasing public debt represents a “growing stability risk” for both the domestic economy and the broader global financial system.

According to its preliminary assessment issued after the Article IV review process, the IMF observed that American authorities are advancing an extensive policy framework designed to enhance living standards and reinforce economic independence. These efforts encompass bolstering domestic industrial production, narrowing trade imbalances, decreasing dependence on imported goods, ramping up energy output, reducing reliance on undocumented workers, and limiting the federal government’s footprint in economic activity.

As stated by reports, economic performance in 2025 remained solid, underpinned by robust gains in productivity, even though a federal government shutdown late the previous year created temporary disruptions.

Although the imposition of tariffs contributed to higher inflation in goods, price pressures within the services sector continued to moderate. At the same time, the labor market stayed near full employment levels, despite a deceleration in hiring. Financial conditions remained comparatively accommodative, equity markets climbed to historic peaks, and the federal budget deficit edged down to 5.9% of gross domestic product for fiscal year 2025.

The Fund projects that economic growth will strengthen from 2.2% in the previous year to 2.4% in the current year. It further anticipates that tariff-related inflationary effects will gradually subside in the months ahead, while the unemployment rate is expected to hover at approximately 4% throughout 2026 and 2027.

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