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28 Feb 2013
IMF will revise US outlook after the sequestration
The International Monetary Fund will revise US growth forecast if sequester reaches its March 1st deadline and the government must cut spending lower. According to sources, the IMF update forecast would be reflected in the outlook to be published in April as the U.S. spending cuts will hurt economic outlook.
The spending cuts full impact is likely to be 0.5 percentage points of the US GDP and the global impact of the cuts would affect countries with most active trade relations with US such as Canada, Mexico, Japan, UK and the whole Euro area.
As BBH Global Head of Currency Strategy Marc Chandler points, "the political paralysis means that the $1.2 trillion in spending cuts are set to go into effect with an $85 bln in cuts during the remainder of the current fiscal year." Assuming that "ever dollar cut in spending reduces GDP by a dollar, the sequester will shave US growth by around 0.5% this year."
The spending cuts full impact is likely to be 0.5 percentage points of the US GDP and the global impact of the cuts would affect countries with most active trade relations with US such as Canada, Mexico, Japan, UK and the whole Euro area.
As BBH Global Head of Currency Strategy Marc Chandler points, "the political paralysis means that the $1.2 trillion in spending cuts are set to go into effect with an $85 bln in cuts during the remainder of the current fiscal year." Assuming that "ever dollar cut in spending reduces GDP by a dollar, the sequester will shave US growth by around 0.5% this year."