Kristalina Georgieva, Managing Director of the International Monetary Fund, stated on Tuesday that the days of her organization regularly downgrading world growth are nearly gone.
“I don’t see a downgrade right now, but growth will decelerate in 2023,” Georgieva said at the World Economic Forum in Davos, Switzerland.
“Our forecast is that we will be down by half a percentage point compared to 2022. The good news is that we expect growth to bottom out this year, and 2024 to be the year when the global economy finally turns around,” Georgieva added.
Since October 2021, the International Monetary Fund has reduced its growth prediction three times.
On the possibility of central banks decreasing interest rates, Georgieva stated that we are “not quite there yet,” since inflation is dropping but still remains “very high.”
“Central banks must be careful not to take their foot off the brake too soon,” she added. Last week, the United States’ inflation rate fell to its lowest level since October 2021, while eurozone inflation fell for the second month in a row in December.
In 2023, will China be in a “better place”?
Concerning China, Georgieva reiterated the IMF’s forecasts that the country’s GDP will rise, but it will not contribute as much to global growth as it has in the past.
“China growth rates are not going to return to the days when China delivered roughly 40% of global growth; this is not going to happen,” Georgieva said, noting that the country suffered below-average growth in 2022 for the first time in 40 years.
If China sticks to its current Covid-19 reopening program, the nation will meet the IMF’s growth predictions of 4.4% by the end of the year, according to Georgieva. “Not 7%, not 6%, but still much above than the average growth,” she stressed.
The managing director’s remarks came a day after the IMF issued a fresh research claiming that fragmentation might cost the global economy up to 7% of GDP.