IMF chief says markets have good reason to be more upbeat

IMF chief says markets have good reason to be more upbeat.

The International Monetary Fund (IMF) Managing Director Kristalina Georgieva has said that financial markets have good reason to be more optimistic, citing the US economy likely avoiding recession and China’s reopening from pandemic controls.

Speaking at the World Government Summit, Georgieva said that the IMF’s outlook for 2023 was “less bad, not good” due to a slowdown in economic growth and inflation remains a concern.

She highlighted resilient US and EU labour markets, China’s reopening, and “surprisingly good results of central banks tightening up financial conditions and inflation finally trimming down” as positive factors.

When asked about the possibility of more monetary tightening, Georgieva said that the IMF expected tightening this year, but did not project it would continue “way into” 2024.

“The markets have good reason to be more upbeat because what they are finally seeing is the US economy likely to avoid recession…they are also seeing China re-opening and Chinese consumers rushing to spend the money they saved during the pandemic, the lockdown,” she said.

The IMF chief also praised Gulf Arab oil and gas producers for “relentlessly” pursuing fiscal reforms, including diversifying revenue sources by introducing new taxes.

When asked about criticism of the UAE hosting the COP28 climate conference in November, Georgieva said that the focus should be on what needs to be done to fight the climate crisis.

“We talk about inclusive approach to fighting the climate crisis. Inclusive is exactly that: all hands on deck,” she said. “If we miss, yet again, a chance to deliver on our own promises, we are all cooked.””