The World Bank believes that the US economy is accelerating sustainably, which could boost potential growth and send a positive signal to the global economy.

Ayhan Kose, Deputy Chief Economist of the World Bank, believes the US economy may be experiencing sustained acceleration in growth, a positive development for the rest of the world, amid forecasts that the global economy will experience its weakest decade of growth in half a century.

According to The Wall Street Journal on January 27, Ayhan Kose said in an interview that the global economy has shown surprising resilience in the face of a series of shocks, with the US recording another year of unexpectedly strong growth.

Ayhan Kose argues that this achievement opens up the possibility that the potential growth rate (the rate at which output can increase when using all resources without causing inflation) could be higher than currently estimated.

The World Bank estimates the US economy will grow by 2.1% in 2025, which would bring the average growth rate since 2022 to 2.6%, compared to 2.2% in the decade leading up to 2020. This figure excludes the first year of the decade, when the economy grew by 6.2% thanks to a recovery from COVID-19 pandemic-related lockdowns.

Potential growth can be considered the maximum speed of the economy. It is important to policymakers because it provides guidance on the likelihood of inflationary pressures and forecasts budget revenues. Currently, the U.S. Congressional Budget Office estimates potential growth at 1.8%.

Higher growth rates would suggest the economy can grow faster without the Federal Reserve raising key interest rates and indicate that the budget deficit is likely to be smaller than projected.

Changes in potential growth rates are often related to changes in population or labor productivity. With more labor, the economy can grow faster without overheating, or the same number of workers can become more efficient thanks to new technology.

According to Ayhan Kose, with the investment boom, with continued fiscal support year after year, and of course if we look at the improving labor productivity figures, it can be argued that there has been a change in the potential growth rate, which may now be 2.2%, or possibly 2.4%.

The World Bank forecasts the US economy will grow slightly faster in 2026, at around 2.2%. However, some other organizations have a more optimistic view. BNP Paribas forecasts the world's largest economy will grow by 2.9% in 2026.

Source: VTV

• USTR Makes Findings and Proposes Action in 60 Section 301 Investigations Relating to Failures to Take Action on Trade in Forced Labor Goods
• [VCCI] The US officially initiates a Section 301 Investigation into Vietnam on Intellectual property
• General Secretary and President To Lam's working visit to three ASEAN countries: Demonstrating the stature of proactive and constructive diplomacy.
• Viet Nam accelerates innovation drive as skilled workforce becomes key to science and technology growth
• The US is increasing controls on AI chip exports