IMF chief says global economy shows positive momentum, warns of risks

Washington, Feb 3: Kristalina Georgieva, managing director of the International Monetary Fund (IMF), said Thursday that although the IMF raised the global growth forecast, there’s still a need “to be mindful of risks.”

At a media roundtable at IMF headquarters in Washington D.C. on Thursday, the IMF chief said that with conflicts still going on between Russia and Ukraine, and Israel and Hamas, the complex geopolitical situation still brings uncertainties to the global economic outlook.

The IMF upgraded the global growth forecast to 3.1 percent in 2024, 0.2 percentage point higher than the projection in October 2023, Georgieva said.

On the shipping disruptions in the Middle East, the IMF chief said that in January, cargo passing to the Suez Canal dropped by 43 percent from a year earlier, dealing a blow to the economy of relevant economies.

On the monetary policy, the IMF chief mentioned the risk of premature loosening as well as the risk of maintaining higher interest rates for an extended period. For the United States, the risk of keeping interest rates higher for longer than necessary is not just a risk for the U.S. economy, but for the global economy, she said.

“When other countries especially many emerging market economies that have brought inflation down to target already move to lower interest rates, if the U.S. continues to be higher, that could impact exchange rates and it can impact other countries in a somewhat negative way,” Georgieva said.

On the Chinese economy, Georgieva told Xinhua that “the Chinese economy performed in 2023 slightly above expectations.” She said that looking ahead, decisively addressing the challenges, including the stress in the property sector, and managing local government debt is crucial for sustaining China’s economic momentum, Georgieva said.

Georgieva said that some actions have already been taken by the Chinese government in the property sector. China’s commitment to the green economy is evident in notable decisions, particularly in sectors like electric vehicles, she said.

UNI

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