Global Economy Sees Upward Trend, But Risks Remain, Warns IMF Chief

International Monetary Fund (IMF) Managing Director Kristalina Georgieva offered a cautiously optimistic outlook on the global economy on Thursday, raising the growth forecast for 2024 while highlighting persistent risks.

Addressing a media roundtable at IMF headquarters, Georgieva acknowledged the ongoing conflicts in Ukraine and the Middle East, emphasizing their potential to destabilize the economic outlook. However, she announced a revised growth forecast of 3.1% for 2024, representing a 0.2% point increase from the October 2023 projection.

Georgieva expressed concern about shipping disruptions in the Middle East, particularly a 43% year-on-year decline in cargo passing through the Suez Canal in January. This decrease, she warned, could adversely impact affected economies.

Turning to monetary policy, Georgieva cautioned against both premature interest rate adjustments and extended periods of high rates. She specifically warned that prolonged high rates in the United States could negatively impact global financial stability.

"If the U.S. maintains higher interest rates for longer than necessary, it could impact exchange rates and harm other countries, especially emerging markets that have already controlled inflation," Georgieva explained.

Regarding China's economy, Georgieva commended its 2023 performance as exceeding expectations. Looking ahead, she stressed the importance of decisive action to address challenges like the property sector's stress and local government debt to maintain China's economic momentum.

Georgieva acknowledged recent measures taken by the Chinese government in the property sector and praised their commitment to the green economy, citing progress in areas like electric vehicles.