The Managing Director of the International Monetary Fund (IMF), Kristalina Georgieva, has warned of growing risks to global financial stability in light of recent banking turmoil, even as she pointed to signs of recovery in China that could help lift global growth.
Speaking on Sunday at the China Development Forum in Beijing, Georgieva acknowledged that while swift action from major central banks had helped ease financial market tensions, the overall climate remains fragile.
“Risks to financial stability have increased,” Georgieva stated, referring to recent bank failures including Credit Suisse, Silicon Valley Bank, and Signature Bank. “Uncertainty is high, emphasizing the need for vigilance.”
IMF Maintains Cautious Global Outlook
The IMF chief reiterated the Fund’s projection that global economic growth will slow to just under 3% in 2023, down from 3.2% in 2022, and significantly below the historical average of 3.8%. She attributed this slowdown to persistent shocks from the COVID-19 pandemic, the ongoing war in Ukraine, and tighter global monetary policy.
However, Georgieva also noted that China’s post-COVID rebound offers a rare bright spot in the global landscape.
China’s Growth a Key Driver of Global Recovery
According to the IMF, China’s economy is expected to grow by 5.2% in 2023, following a sluggish 3% growth in 2022 — one of its lowest in decades. This recovery, Georgieva said, would contribute about one-third of global economic growth this year.
“Every 1% increase in China’s GDP could lift growth in other Asian economies by 0.3% on average,” she explained.
Still, she called on Chinese leaders to “rebalance” their economy toward consumption-led growth, emphasizing that such a shift would create a more resilient and sustainable model.
“More durable, less reliant on debt, and better aligned with climate goals,” Georgieva noted, suggesting reforms in social protection, healthcare, and unemployment insurance to strengthen household consumption.
The IMF also encouraged China to undertake market-oriented reforms, including greater investment in education and policies to level the playing field between private and state-owned enterprises.
“The cumulative effect of these policies could be significant,” Georgieva said, reinforcing the IMF’s support for inclusive and sustainable development.
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