IMF Managing Director Kristalina Georgieva, who is also a former CEO of the World Bank (2017-2019), spoke at the 2023 China Development Forum, where she highlighted the key current challenges faced by the global economy.
In a speech published on March 26, Georgieva stated that the world economy is yet to see the start of spring, with global growth expected to slow down to below 3% due to various factors such as the pandemic, war in Ukraine, and monetary tightening.
She also mentioned the increased risks to financial stability, especially with higher debt levels and the rapid transition to higher interest rates to combat inflation.
Calls for vigilance
Georgieva highlighted the need for policymakers to monitor developments closely and assess potential implications for the global economic outlook and global financial stability. Kristalina Georgieva said:
“Policymakers have acted decisively in response to financial stability risks, and advanced economy central banks have enhanced the provision of U.S. dollar liquidity. These actions have eased market stress to some extent, but uncertainty is high which underscores the need for vigilance.”
A positive note on China
According to the Managing Director, there are also some positive developments, especially in China, where the economy is seeing a strong rebound, and the IMF’s January forecast puts GDP growth at 5.2% this year.
She stated that this rebound is driving growth, with China set to account for around one-third of global growth in 2023.
Furthermore, Georgieva highlighted two opportunities for policymakers: raising productivity and rebalancing the economy away from investment and towards more consumption-driven growth that is more durable and less reliant on debt, and green growth, which involves transitioning to net-zero emissions by 2060.
Finally, Georgieva noted that policies to rebalance the economy will simultaneously help achieve China’s climate goals and that the combined impact of these policies could significantly boost the economy’s productive capacity.