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.
“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.
Georgieva spoke hours after Donald Trump clinched victory in Iowa while seeking the Republican candidacy. Asked if she agrees with her IMF predecessor, Christine Lagarde, that another Trump presidency could be a threat, Georgieva said it’s for Americans to choose their leader — and the fund will focus on policies the winner will ultimately implement.
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 grew around 5.2% in 2023, surpassing the government’s official growth target for the year without relying on “massive stimulus,” Chinese Premier Li Qiang said in Davos on Tuesday — one day before official figures for gross domestic product, industrial production and retail sales are due.
For 2024, Beijing is widely expected to set a growth target at around 5% again.
Georgieva is scheduled to meet Argentine President Javier Milei on Wednesday in Davos. Asked about results under his new government, she said “so far so good.”
“What this administration is doing is to very aggressively address some of the shortcomings we all see,” Georgieva said. “Fiscal: out of whack — you spend more than you can afford. Reserves: wiped out. So we are seeing progress on all those fronts.”
The IMF gave Milei’s economic plans a key vote of confidence on Jan. 10, approving a review of the country’s $44 billion program that will likely unlock a larger-than-expected loan disbursement of $4.7 billion for the South American nation, pending board approval.
The IMF cares “deeply” that Argentina protects its most vulnerable people as it moves forward with “very bold reforms,” Georgieva said.