Blanchard Says U.S. Default May Trigger Recession Or ‘Worse’

A U.S. government default would “almost surely” derail the nation’s economic recovery and lead to potentially major market disruptions worldwide, said Olivier Blanchard, chief economist of the International Monetary Fund.

Blanchard was speaking today during a press conference in Washington. He called a default a “tail risk” and a low-probability event.

A failure to lift the U.S. debt limit that triggers a default could mean the economy slides into a “recession or even worse,” he said.

The Washington-based IMF, which is holding its annual meeting this week in the U.S. capital, released an update of its World Economic Outlook earlier today that showed lower projections for global growth this year and next than the fund predicted in July.

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