Markets have good reason to be more optimistic about the economy, says IMF

The head of the International Monetary Fund (IMF) said Monday that financial markets have good reason to be more optimistic, pointing to the likelihood of the US economy avoiding recession and China’s reopening after the pandemic is brought under control.

Speaking at the World Summit of Governments, IMF Managing Director Kristalina Georgieva described the IMF’s outlook for 2023 as “less bad, not good”, given that the Fund has forecast a slowdown in economic growth this year and inflation remains a concern.

The positive factors are being the resistance of the labor markets of the United States and the European Union, the reopening of China and the “surprisingly good results from central banks tightening financial conditions and inflation finally slowing, although the fight is not yet won”, he added.

Asked if there would be more doses of monetary tightening, Georgieva said that the Fund expects it to continue this year, but does not expect it to continue “well into2024.

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“The markets have good reason to be more optimistic, because what they are seeing is that the US economy will probably avoid recession (…) They are also seeing China reopening and Chinese consumers rushing to spend the money they saved during the pandemic and lockdown“, he pointed.

The director of the IMF spoke in an interview on the stage of the annual summit organized by Dubai, in the United Arab Emirates (UAE).

Georgieva praised the oil and gas producers of the Arab countries of the Persian Gulf for carrying out tax reforms “without a rest”, such as diversifying sources of income by introducing new taxes.

The UAE will host the COP28 climate conference in November.

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