Yellen says global economy remains resilient, lauds US as growth driver

Strong US economic growth has been a "key driver" of better than expected global growth, US Treasury Secretary Janet Yellen will tell a news conference on Tuesday ahead of this week's meeting of G20 finance officials in Sao Paolo, Brazil.

In excerpts of her remarks released by Treasury, Yellen said the International Monetary Fund and other forecasters had projected a broad-based slowdown in the global economy in 2023 that did not happen.

Instead, growth came in at 3.1 per cent, exceeding expectations, and inflation fell, with prices expected to continue falling this year in about 80 per cent of economies, she said. "Going forward, we remain cognizant of the risks facing the global outlook and continue to carefully monitor the economic challenges in certain countries, but the global economy remains resilient," she said.

Yellen said US economic strength had underpinned global growth, fueled by Biden administration policies supporting businesses hit hard by the COVID-19 pandemic and investments in domestic manufacturing, clean energy and infrastructure.

US inflation had also declined significantly from its peak and the US labor market was historically strong, she said, with the prime-age labor force above its pre-pandemic level and the unemployment rate near historic lows.

"Had a US 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," Yellen said.

The IMF last month edged its global growth outlook to 3.1 per cent in 2024, up two-tenths of a percentage point from its October forecast, and left its 2025 forecast unchanged at 3.2 per cent.

The IMF's chief economist, Pierre-Olivier Gourinchas, said the global lender's updated World Economic Outlook showed a "soft landing" was in sight, but overall growth and global trade remained lower than the historical average.

Yellen said growth in many economies, including Brazil, the current president of the Group of 20 economies, had also contributed to global growth, although other economies still faced challenges. She did not specify which countries were facing problems.

IMF spokesperson Julie Kozack last week told reporters the global lender would take new information on the Japanese and British economies, which both slipped into recession, into account as it prepared a new global forecast to be released in April.