Global economy set to improve, says IMF

2023-01-19 10:18:44China Daily Editor : Li Yan ECNS App Download

More optimistic forecast follows recent good news, including policies in China

There is cautious optimism on the future of the global economy evident at the World Economic Forum in Davos, Switzerland where business leaders and government officials have expressed more upbeat forecasts than in previous months.

Hopes that the world's economy will avoid a recession this year were given a lift with some encouraging data coming out of Europe and the United States recently, and with China implementing market-friendly measures that will boost consumer spending, reported the Financial Times.

The newspaper quoted Gita Gopinath, deputy managing director of the International Monetary Fund, or IMF, suggesting the fund would upgrade its economic forecasts, saying it expected an "improvement" in the second half of the year and into 2024.

Gopinath warned that 2023 would still be a "tough year". Central banks should "stay the course", she said, keeping interest rates rising until inflation "fell sustainably".

European Commission President Ursula von der Leyen told the forum that the region had brought energy prices down "quicker than anyone expected".

Fewer supply-chain difficulties and China's optimized COVID response have given financial markets a boost, the FT noted.

German think-tank ZEW said its measure of investor sentiment had "turned positive" for the first time since the outbreak of the Russia-Ukraine conflict.

Bloomberg quoted Germany's Chancellor Olaf Scholz as saying that the eurozone's largest economy would "likely avoid a recession".

China's economy would bounce back, said Vice-Premier Liu He in his speech at the forum on Tuesday.

"If we work hard enough, we are confident that growth will most likely return to its normal trend," he told the forum. "The Chinese economy will see a significant improvement in 2023."

Daniel Pinto, head of JPMorgan's investment bank, was quoted as saying the world economy has shown resilience.

"We have come through a period with a war, a pandemic, and the biggest normalization of monetary policy in history," he said. "Considering all the things that have happened, the world is a lot better than you would have expected."

A general caution remains apparent, however, with the chief of United States banking giant Citigroup, Jane Fraser, warning of a series of "rolling country recessions". She told a forum panel that "different countries are in very different positions" and with central banks' interest rate increases likely, it is a "choppy time in the world", reported The Guardian newspaper.

She added that Citigroup sees the overall economic picture improving with "tail risks coming in a little bit more".

"It's been a warmer winter in Europe. We've obviously seen some very good news from economic opening — a slightly more bent to market-friendly measures in China as they open up.

"In the states, (there is) a very strong labor market and what is likely to be a recession there, but something that is pretty manageable."


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