According to IMF Managing Director (MD) Kristalina Georgieva, the global economy is expected to experience improved growth in 2024 compared to the previous year.
In relation to the United States (U.S.) economy, it is anticipated to undergo a gradual decline, commonly referred to as a “soft landing,” coinciding with the implementation of expected federal interest rate cuts.
Georgieva emphasized that the global economy has shown remarkable resilience, with 2023 surpassing expectations to some extent. However, she also highlighted that ongoing geopolitical tensions could pose potential risks, leading to increased price pressures and challenges in the supply chain during 2024.
During the Bloomberg 2024 event held in Davos, Georgieva expressed that the global economy has shown remarkable resilience, surpassing our initial expectations in 2023. Nonetheless, Georgieva acknowledged the possibility of encountering certain challenges during the transition from 2023 to 2024.
Likelihood of a soft landing increases
Similarly, Gita Gopinath, first deputy MD of the IMF, expressed agreement with Georgieva’s views during the Davos 2024. Gopinath stated that the likelihood of a soft landing had significantly increased and cautioned that market expectations of swift interest rate cuts were somewhat premature.
Since the IMF’s forecast in October, economic circumstances have evolved. While there is a possibility of reduced inflation without triggering a recession in major economies, the security situation in the Middle East poses a threat of new price pressures and challenges in the global supply chain.
Read more: Davos 2024: Mixed growth outlook for global economy amid challenges
Georgieva urges China to implement structural reforms
Georgieva, talking about China, appealed to Xi Jinping’s administration to persist in opening up state-owned enterprises, addressing local government debt concerns, and implementing regulations in the real estate sector. These measures were crucial to prevent the economy from succumbing to stagnant growth.
Georgieva said China recognizes that unless it implements challenging structural reforms, its growth rate may dip below 4 percent. She further stressed that China exhibited a strong determination to sustain its international engagement.
During Davos 2024, Chinese Premier Li Qiang announced a preliminary estimate that the world’s second largest economy achieved a growth rate of approximately 5.2 percent in 2023, surpassing the government’s official growth target for the year. This accomplishment was attained without relying on extensive stimulus measures. Official figures on GDP and industry data were scheduled for release the following day, together with production and retail sales statistics.
It is widely anticipated that Beijing will set a growth target of around 5 percent for 2024, mirroring the previous year’s objective.
Georgieva’s assessment of Milei’s government
Georgieva is set to meet with Argentine President Javier Milei on Wednesday in Davos 2024. When asked about the progress made under his new government, she responded that the outcomes so far have been positive.
Georgieva also stated that this administration is diligently addressing the various challenges that are evident to all.
On January 10, the IMF expressed strong support for Milei’s economic plans by approving a review of Argentina’s $44 billion program. This decision is expected to enable the country to access a larger-than-anticipated $4.7 billion loan, pending approval from the board.
Georgieva underlined that the IMF places great importance on Argentina’s efforts to protect its most vulnerable citizens while implementing ambitious reforms.
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