During her 2023 IMF Annual Meetings curtain-raiser speech in Abidjan, Ivory Coast, IMF Managing Director Kristalina Georgieva expressed optimism about the global economy, seeing a higher likelihood of a “soft landing” despite the presence of elevated interest rates.
“The world economy has shown remarkable resilience, and the first half of 2023 has brought some good news, largely because of stronger-than-expected demand for services and tangible progress in the fight against inflation,” she said in her 2023 IMF Annual Meetings curtain raiser speech in Abidjan, Ivory Coast.
“This increases the chances for a soft landing for the global economy.”
A soft landing is a situation where a central bank raises interest rates too much and too high, which leads to an economic slowdown but avoids a recession. Many central banks around the world have been raising rates since last year in order to fight against high inflation levels in their respective countries.
“While the recovery from the shocks of the past few years continues, it is slow and uneven,” said Georgieva, noting that the current pace of global economic growth remains quite weak, well below the 3.8% average in the two decades before the coronavirus pandemic.
The IMF estimates that the cumulative global output loss from shocks since 2020 amounts to $3.7 trillion as of this year, she said, adding “this loss is unevenly distributed across countries.”