The International Monetary Fund is not likely to downgrade its forecast for 2.7% growth in 2023, the head of the global lender said on Thursday, noting that a feared oil price spike had failed to materialize and labor markets remained strong.
IMF Managing Director Kristalina Georgieva said 2023 would
be another "tough year" for the global economy, and inflation
remained stubborn, but she did not expect another year of successive downgrades
like those seen last year, barring unexpected developments.
The IMF in October forecast that global growth would slow to
2.7% in 2023 after falling from 6.0% in 2021 to 3.2% in 2022. It had previously
forecast growth of 2.9% for 2023, but Georgieva said she did not expect further
cuts to the outlook.
"Growth continues to slow down in 2023," she told
reporters at the IMF's headquarters in Washington. "The more positive
piece of the picture is in the resilience of labor markets. As long as people
are employed, even if prices are high, people spend ... and that has helped the
performance."
She added that the IMF did not expect major downgrades,
although the final number had not been determined. "That's the good
news."
Georgieva said the IMF expected the slowdown in global
growth to "bottom out" and "turn around towards the end of '23
and into '24."
Georgieva said there was much hope that China - which
previously contributed some 35% to 40% of global growth, but had
"disappointing" results last year - would once again help fuel global
growth, likely from mid-2023. But that depended on Beijing not changing course
and sticking to its plans to reverse its zero-COVID policies, she said.
"What is most important is for China to stay the course
and not to back off from that," Georgieva said, calling developments in
China "very likely the single most important factor for global
growth."
She said the United States - the biggest economy in the
world - was likely to see a soft landing, and would suffer only a mild
recession, if it did enter a technical recession.
But Georgieva said great uncertainty remained, citing the
risk of a significant climate event, a major cyberattack or the danger of
escalation in Russia's war in Ukraine, for instance through the use of nuclear
weapons.
"We are now in a more shockprone world and we have to
be open-minded that there could be a risk turn that we are not even thinking
about," she said. "That's the whole point of the last years. The
unthinkable has happened twice."
She cited concerns about growing social unrest in Brazil,
Peru and other countries, and the impact of tightening financial conditions
remained unclear.
But inflation remained "stubborn" and central
banks should continue to press for price stability, she added.
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