Davos day 4: IMF’s Georgieva says economic outlook ‘less bad’ than feared; Russia heading for ‘incredible poverty’ – as it happened – The Guardian

by | Jan 20, 2023 | Financial

05.22 ESTIMF’s Georgieva: Economic situation is less bad than we fearedKristalina Georgieva speaks first on today’s economic outlook panel, and drops a hint that the International Monetary Fund might upgrade its economic forecasts.Georgieva says that the economic outlook is “less bad than we feared a couple of months ago”.But, she cautions, “less bad does not yet mean good”.Georgieva says there are several reasons for optimism.Firstly, inflation is starting to head down; headline inflation in particular.Secondly, China’s potential to boost growth has improved. Last year, China’s economy grew more slowly than the global average for the first time in decades.But with the reopening of China, we now expect its growth to exceed the global average. The IMF expects the world economy to expand by 2.7% this year, Georgieva says, although this may be corrected in a couple of days, compared to China which could grow at 4.4%Thirdly, the strengths of labour markets have led to consumers keeping spending and supporting economic growth.But, 2.7% growth is not fabulous – it would be one of the worst performances in years, apart from after the 2008 financial crisis and the pandemic.Georgieva tells Davos delegates that there are several reasons for caution.One, we don’t know how inflation will “march downwards”.Two, what if China’s faster growth means higher oil and gas prices, pushing inflation up?Third, the Ukraine war is a tremendous risk to confidence, particularly in EuropeSo in conclusion, Georgieva says we shouldn’t get carried away:Be careful not to get on the other side of the spectrum, from being too pessimistic to too optimistic.Updated at 06.33 EST17m ago08.40 ESTThe World Economic Forum annual meeting is over.Delegates are scarpering to make their way home, or to a swanky lunch up the mountain.But away from her, protests calling for the rich to be …

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