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IMF director Kristalina Georgieva says 2023 will be another “tough year” for the global economy.
The International Monetary Fund (IMF) is not expected to downgrade its forecast for 2.7 percent growth in 2023, the global lender’s head said, noting concerns about an oil price spike had failed and labor markets remained strong .
IMF director Kristalina Georgieva said 2023 would be another “tough year” for the global economy and inflation would remain stubborn, but she did not expect another year of consecutive downward revisions like last year’s, barring unexpected developments.
“Growth will continue to slow in 2023,” she told reporters at the IMF headquarters in Washington, DC. “The more positive part of the picture is the resilience of labor markets. As long as people are employed, even when prices are high, people are spending…and that has helped performance.”
She added that the IMF does not expect significant cuts. “That’s the good news.”
Georgieva said the IMF expected the slowdown in global growth would “bottom out” and “turn to ’24 by the end of ’23”.
Georgieva also said there is high hope that China — which previously contributed some 35 to 40 percent of global growth but posted “disappointing” results last year — would again contribute to global growth, likely from mid-2023. depended on Beijing not changing course and sticking to its plans to reverse its zero-COVID policy, she said.
She said the United States, the world’s largest economy, is likely to experience a soft landing and only a mild recession if it goes into a technical recession.
But Georgieva said great uncertainty remained, including a major climate event, a major cyber-attack or the danger of escalation in Russia’s war in Ukraine, for example through the use of nuclear weapons.
“We’re in a more shock-sensitive world now and we need to be open-minded that there could be a turn of risk that we’re not even thinking about,” she said. “That’s the whole point of the past few years. The unthinkable has happened twice.”
She expressed concern about growing social unrest in Brazil, Peru and other countries, saying the impact of the tightening financial conditions remained unclear.
But inflation remained “stubborn” and central banks should continue to push for price stability, she added.