The head of the global lender has stated that the International Monetary Fund (IMF) is not expected to lower its forecast for growth of 2.7% in 2023. He noted that concerns about an increase in oil prices had not materialized and that labor markets remained robust.
Kristalina Georgieva, the managing director of the IMF, stated that 2023 would be another “tough year” for the global economy and that inflation would continue to be stubborn. However, she did not anticipate another year of consecutive downgrades like the one that occurred last year unless something unexpected happened.
At the IMF’s headquarters in Washington, DC, she told reporters, “Growth continues to slow down in 2023.” The resilience of labor markets is the more encouraging aspect of the picture. Even when prices are high, people still spend, which has helped the performance as long as people are employed.
The IMF does not anticipate any significant downgrades, she added. The good news is that.
The IMF, according to Georgieva, anticipated that the global growth slowdown would “bottom out” and “turn around towards the end of ’23 and into ’24.”
Georgieva also stated that there was a lot of hope that China, which had previously contributed between 35% and 40% of global growth but had “disappointing” results last year, would once more do so, probably by the middle of 2023. She stated, however, that this was contingent on Beijing adhering to its plans to reverse its zero-COVID policies and not changing course.
She stated that the largest economy in the world, the United States, would likely experience a soft landing and only a mild recession if it did enter a technical recession.
However, Georgieva stated that there was still a lot of uncertainty, such as the possibility of Russia’s war in Ukraine escalating, for example through the use of nuclear weapons, a significant climate event, or a significant cyberattack.
She stated, “We are now in a world that is more susceptible to shocks, and we need to be open-minded that there could be risk turns that we are not even thinking about.” That has been the whole purpose of the last few years. Twice the unthinkable has occurred.
She cited concerns regarding rising social unrest in Brazil, Peru, and other nations, as well as the undetermined effects of tightening financial conditions.
She added, however, that central banks should continue to push for price stability because inflation remained “stubborn.”
SOURCE: REUTERS