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‘We don’t see global recession’ – IMF chief

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 The head of the International Monetary Fund (IMF) Managing Director Kristalina Georgieva called for greater vigilance over the global financial system during a speech in China on Sunday in which she also pointed to “green shoots” emerging in the world’s second-largest economy.

“Risks to financial stability have increased,” she said during remarks at the China Development Forum in Beijing. Georgieva lauded how policy-makers had acted swiftly in response to the banking crisis, citing the recent collaboration by major central banks to boost the flow of US dollars around the world.

“These actions have eased market stress to some extent,” she said. “But uncertainty is high, which underscores the need for vigilance.” Global investors have been on high alert about the health of the banking sector following the sudden downfalls of Credit Suisse, Silicon Valley Bank and US regional lender Signature Bank. Georgieva said Sunday that the IMF was continuing to watch the situation, and assess potential implications for the global economic outlook.

Meanwhile, she reiterated an IMF projection that the world economy will see growth slow to just under 3% this year, due to continued fallout from the pandemic, the war in Ukraine and tighter monetary policies. That’s compared to the historic average of 3.8%, according to Georgieva, and down from 3.2% in 2022. But she also pointed to the emergence of “green shoots” in China, where the IMF expects the recently reopened economy to expand by 5.2% this year. That’s roughly in line with Beijing’s official target of 5%. Such growth would mark a historic low. But it would still be a significant improvement on the 3% logged by the world’s second-largest economy last year — and help prop up the global economy.

China’s rebound this year will allow it to contribute roughly one third of global growth, according to Georgieva. Any 1% increase in Chinese GDP growth would also help lift other Asian economies’ growth by an average of 0.3%, she added. But the IMF chief urged Chinese policymakers to take steps to shift its economy and “rebalance” it toward more consumption-driven growth. Leaning toward that model would be “more durable, less reliant on debt, and will also help address climate challenges,” Georgieva said. “To get there, the social protection system will need to play a central role through higher health and unemployment insurance benefits to cushion households against shocks.” (CNN Business Hong Kong CNN)


Tuesday, March 28, 2023 – 01:00

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