Eastern time Thursday, the International Monetary Fund may not lower its forecast of 2.7% economic growth in 2023, IMF Managing Director Kristalina Georgieva said in her first press conference of 2023.
She also cited growing evidence that the US could avoid a recession this year and achieve a "soft landing" for the economy. And even if the US enters a technical recession, it will suffer only a mild one.
Global growth is expected to bottom out this year
Ms Georgieva said 2023 would be another "difficult year" for the global economy, with inflation remaining stubborn. But she doesn't expect another back-to-back downgrade like last year's, barring unexpected developments.
"Global growth will continue to slow in 2023," she said. "On a more positive note is the resilience of the Labour market. As long as people have jobs, people will spend even if prices are high... It helps performance."
She revealed that the IMF expected the slowdown in global growth to "bottom out" this year and start to turn around in late 2023 and 2024.
But Georgieva also said there were still big uncertainties about the future, including the risk of a major climate event, a major cyber attack or an escalation of the Russia-Ukraine conflict.
She also cited concerns about growing social unrest in Brazil, Peru and other countries, and the unclear impact of tighter financial conditions. She added that inflation remained "stubborn" and that central banks should continue to promote price stability.
The US is expected to avoid a recession
The US has been the subject of intense debate about whether it will slip into recession this year. Ms Georgieva said she preferred to expect a soft landing.
Georgieva said the U.S. labor market remains resilient and consumer demand remains strong, despite higher interest rates to fight inflation.
He also noted that there had been a healthy shift in the US from excessive purchases of goods to demand for services, where consumer concentration had put a lot of inflationary pressure on prices. At the same time, the sources of growth are more diverse.
"This provides some justification for the expectation that the US will avoid a recession," Ms Georgieva said. I would actually say that even if it is technically a recession, it will be a very mild recession."
In October, the IMF forecast U.S. GDP growth of 1.0 percent in 2023. This month, it will update that forecast. On Tuesday, the World Bank updated its forecast for U.S. economic growth of 0.5 percent in 2023.
