IMF’s Kristalina Georgieva sees hope on the horizon amid global inflation and a bleak recession – but not in 2023

The head of the International Monetary Fund said she finally saw hope for the global economy on the horizon after months of warnings and gloom from the organization.

The IMF — a credit agency with 190 member countries committed to supporting stable economies — has revised downwards its global growth forecasts three times since the end of 2021.

But speaking to CNBC at the World Economic Forum’s flagship annual conference on Tuesday in Davos, Switzerland, IMF Managing Director Kristalina Georgieva suggested she could see a light at the end of the tunnel.

“I don’t see a downgrade now, but growth in 2023 will slow down,” she said. “Our forecast is that we will go down half a percentage point from 2022. However, the good news is that we expect growth to bottom out this year and 2024 to be a year where we finally see the global economy picking up again with a benefit.”

Georgieva, who warned in October that central banks like the Federal Reserve and the Bank of England are walking a tightrope on monetary policy, told CNBC on Tuesday that it was “not quite yet” for policymakers to do so to start cutting interest rates as inflation remains elevated despite slowing price growth.

US inflation has cooled in recent months, with CPI falling 0.1% between November and December – but the latest CPI figures showed prices rose 6.5% in the year to December, far from the Fed’s 2% inflation target.

“Central banks have to be careful not to slow down too soon,” Georgieva warned on Tuesday.

More optimistic tone

Georgieva’s comments on Tuesday about her outlook for the economy are a little more optimistic than the IMF has been for the past few months.

Earlier this month, Georgieva said the global economy was facing “a tough year, tougher than the year we are leaving behind,” noting that the IMF expects a third of the world to be in recession by 2023 .

In October, she likened the global economy to “a ship in troubled waters,” just days before the institution downgraded its growth forecast and chief economist Pierre-Olivier Gourinchas warned that “the worst is yet to come.”

The October downgrade lowered the IMF’s expectations for global growth in 2023 to 2% – what it defines as a global recession.

Both Georgieva and Gourinchas have warned that even if economic growth is positive thanks to falling real incomes and rising prices, 2023 will feel like a recession for many around the world.

Back in July, as the IMF again downgraded its global growth outlook, Gourinchas said the IMF’s outlook had “deteriorated significantly” and the world was “on the brink of a global recession.” At the time, the organization described itself as “gloomy.”

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