Share This Post

Asia / Business / Economy

IMF chief on 2023 economic outlook

IMF chief on 2023 economic outlook

During a speech in China on Sunday, the head of the International Monetary Fund called for greater vigilance over the global financial system, while also pointing to “green shoots” emerging in the world’s second-largest economy.

“Risks to financial stability have increased,” said IMF Managing Director Kristalina Georgieva at the China Development Forum in Beijing.

Georgieva praised policymakers for acting quickly in response to the banking crisis, citing major central banks’ recent collaboration to increase the flow of US dollars around the world.

“These actions have alleviated some market stress,” she said. “However, uncertainty is high, emphasizing the need for vigilance.”

Following the unexpected failures of Credit Suisse, Silicon Valley Bank, and US regional lender Signature Bank, global investors have been on high alert about the health of the banking sector.

Concerns about Deutsche Bank, as well as speculation about one of its bond payments, weighed on markets last week, prompting EU leaders to reassure the public about the resilience of Europe’s banking system.

Georgieva stated on Sunday that the IMF would continue to monitor the situation and assess potential implications for the global economy.

Meanwhile, she reiterated an IMF forecast that global growth will slow to just under 3% this year due to the ongoing effects of the pandemic, the war in Ukraine, and tighter monetary policies.

According to Georgieva, this is down from 3.2% in 2022 and below the historical average of 3.8%.

She did, however, mention the appearance of “green shoots” in China, where the IMF expects the recently reopened economy to grow by 5.2% this year. This is close to Beijing’s official target of 5%.
Such expansion would be a historic low. However, it would be a significant improvement over the 3% recorded by the world’s second-largest economy last year, and would help support the global economy.

According to Georgieva, China’s rebound this year will allow it to contribute roughly one-third of global growth. Any 1% increase in Chinese GDP growth would help other Asian economies grow by 0.3% on average, she added.

However, the IMF chief urged Chinese policymakers to take steps to “rebalance” the Chinese economy toward more consumption-driven growth.

Embracing that model would be “more durable, less reliant on debt, and will also help address climate challenges,” according to Georgieva.

“To get there, the social protection system will need to play a central role in cushioning households against shocks through increased health and unemployment insurance benefits.”

Georgieva also advocated for reforms to help “level the playing field between the private and public sectors, as well as investments in education.”

“The cumulative effect of these policies could be significant,” she said.

DISCLAIMER: Clicks ‘n Likes does not own the copyright to most of the News, Opinions, Write-ups, and Views on their platform.

Leave a Reply

Your email address will not be published.

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>