World economy remarkably resilient, US poised for soft landing: IMF

January 16, 2023 (MLN): The global economy is set to receive a boost in 2024 from a slightly stronger-than-anticipated performance last year, according to the head of the International Monetary Fund.

While Managing Director Kristalina Georgieva refused to be drawn on how the Washington-based lender will revise its forecasts later in January, she pointed out that the US was “poised for a soft landing” as interest rates start to decline, Bloomberg reported.

“The world economy has proven to be remarkably resilient,” Georgieva said at an event at Bloomberg House in Davos on Tuesday. “2023 comes better than we expected by a small margin. There is some wind coming from 2023 into 2024.”

IMF chief’s sentiment was echoed by her colleague, First Deputy Managing Director Gita Gopinath, who told a Davos panel that the chances of a so-called soft landing have gone up “quite a bit” and that market expectations for rapid interest-rate cuts are “a bit premature.”

Economic realities have shifted since the IMF’s October forecast growth of 2.9% for this year.

While inflation could recede without throwing major economies into a recession, a drawn-out Israel-Hamas war and Houthi attacks in the Red Sea are threatening new price pressures and supply-chain woes.

Turning to China, she urged Xi Jinping’s administration to continue opening up state-owned enterprises, addressing local government-debt issues and sorting out its real estate sector to ensure the economy won’t fall into a low-growth trap.

“China recognizes that unless they move forward with difficult structural reforms they will see growth dipping under 4%,” Georgieva said, adding that she’s seeing a “a very strong determination to stay engaged internationally.”

The world’s second-biggest economy will publish figures for gross domestic product, industrial production, and retail sales at the end of last year on Wednesday that may offer clues on whether it can sustain momentum this year.

Beijing is widely expected to set the 2024 growth target at around 5% again.

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