The huge fiscal deficit of the United States is exacerbating inflation and posing significant risks to the global economy, said a report released earlier this week by the International Monetary Fund (IMF).
Financial Times recently reported that the IMF's latest Fiscal Monitor Report, released on April 17, shows that the U.S. fiscal deficit is expected to reach 7.1 percent of its gross domestic product (GDP) next year, while the average level of other developed economies is around 2 percent.
The Financial Times quoted the IMF report as saying that large-scale U.S. spending could have a profound impact on the global economy and pose risks to other economies. Therefore, the United States urgently needs to solve the serious imbalance between expenditure and revenue.
IMF data shows that last year, the fiscal deficits of developed economies such as the euro zone were under control, yet the United States saw a considerable fiscal decline, with the deficit accounting for 8.8 percent of its GDP, more than twice the level in 2022. The U.S. Treasury Department’s daily report on Dec 29 last year showed that the federal government's debt exceeded 34 trillion U.S. dollars.
Pierre-Olivier Gourinchas, economic counselor and director of research of the IMF, said the U.S. fiscal situation is particularly worrying, and complicates the Fed's response to high inflation. In the long term, this will increase fiscal and financial risks to the global economy, he said.
As U.S. borrowing costs are closely tied to global markets, the IMF noted that a sudden and sharp rise in U.S. interest rates would lead to a surge in global government bond yields, along with fluctuation in the currency exchange rates in emerging markets and developing economies.
US fiscal deficit to increase risk in global economy: IMF report
On his second official visit to China, Prime Minister of the Republic of Vanuatu Charlot Salwai expressed admiration for China's remarkable ability to balance preserving its cultural heritage with embracing innovative transformation.
Salwai paid an official visit to China from July 7 to 12. During his trip, he toured the southern province of Guangdong and explored the megacities of Beijing and Shanghai. His visit included tours of high-tech companies, a ride on a high-speed train, and a performance of traditional Cantonese opera.
In an interview with China Central Television Network (CCTV) aired on Friday, Salwai recounted his journey starting with a warm welcome that included enjoying Beijing Roast Duck, also known as Peking Duck -- a culinary delight introduced to him by the Chinese ambassador in Vanuatu.
"Many had to say. Peking Duck. Because we had it here on our arrival, so it was very tasty. And I understand that the Chinese ambassador in Vanuatu brought us to one of the traditional restaurants, small but beautiful," he said. The prime minister sees China's preservation of its culture as a vital lesson in understanding one's roots and the journey to the present day, acknowledging China's efforts to integrate cultural preservation with modernization.
"It's going to be my second official visit to China. I'm always impressed to see big changes and especially innovations made by China and especially the cities. Because a big impression is to see how China continues to maintain and keep its culture. Because I think it's the basis of everything -- to know where you come from and to understand where we are today. I feel that China is doing a lot to maintain its culture, but at the same time, doing, innovating to transform its culture,” Salwai said.
He also emphasized the importance of learning from China's sustainable development strategies.
"Today, it comes from a long way, some hardship, the government, and also the people of China. So, I'm impressed to see what is done, especially how China associates infrastructure development with nature. That's meant to keep, continue to keep the environment. It takes effort with the climate change by maintaining the ecosystem. I think it's something that, for a small country like Vanuatu, is important to learn. So, we are here. I'm here with my delegation to learn," Salwai said.
Vanuatu's PM commends China's cultural preservation, innovation amid fast growth
