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Growth will bottom out in 2023 and rebound next year

Managing Director of the International Monetary Fund, IMF, Kristalina Georgieva, attends a session during the World Economic Forum WEF 2022 annual meeting in Davos, Switzerland, May 25, 2022.

Zheng Huansong | Xinhua News Agency | Getty Images

International Monetary Fund Managing Director Kristalina Georgieva told CNBC on Tuesday that the days of her institution making regular downward revisions to global growth were almost over.

“I don’t see a downgrade now, but growth in 2023 will slow down,” Georgieva said at the World Economic Forum in Davos, Switzerland.

“Our projection is that we will be down half a percentage point from 2022. The good news though is that we expect growth to bottom out this year and 2024 to be a year in which we finally see the global economy on an edge,” Georgieva said.

The International Monetary Fund has lowered its growth forecast three times since October 2021.

On the question of central banks likely to cut interest rates, Georgieva said we’re “not quite there yet” as inflation is slowing but remains “still quite high.”

“Central banks need to be careful not to take their foot off the brakes too soon,” she added. Last week, the United States saw its inflation rate hit its lowest level since October 2021, while Eurozone inflation fell for a second consecutive month in December.

A “better place” for China in 2023?

Moving on to China, Georgieva repeated the IMF projections that the country will see its GDP increase, but that it will not represent as large a share of global growth as in the past.

“China’s growth rates won’t go back to the days when China provided about 40% of global growth, that’s not going to happen,” said Georgieva, the country having experienced below average growth for the first time in 40 years in 2022.

If China stays the course with its current Covid-19 reopening schedulethe country will reach IMF growth projections of 4.4% by the end of the year, Georgieva said.

“Not 7%, not 6%, but in a better place above average growth,” she added.

The CEO’s remarks come the day after the The IMF has released a new report saying fragmentation could cost the global economy up to 7% of GDP.

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