IMF Managing Director: "Global Economy Is Heading Toward a Soft Landing"

The Managing Director of the International Monetary Fund (IMF) assessed that the likelihood of a global recession is decreasing as the world economy demonstrates remarkable resilience to shocks from the pandemic, the Ukraine war, and rapid interest rate hikes. However, she pointed out that the uneven nature of the economic recovery, concentrated in certain countries, poses a risk factor that could lead to slower growth over the next five years.

According to major foreign media including the Associated Press on the 5th (local time), Kristalina Georgieva, IMF Managing Director, said in a speech held in Abidjan, C?te d'Ivoire, ahead of the IMF-World Bank (WB) Annual Meetings, "The world economy is recovering from the shocks of recent years, but the recovery remains slow and uneven."

Kristalina Georgieva, IMF Managing Director.
Photo by AFP Yonhap News

She stated, "The United States is the only country where the economic outlook has returned to the pre-pandemic trajectory," and expressed concern that "the slow and uneven recovery since the pandemic could further deepen disparities between countries and among economic actors within countries." Georgieva highlighted that growth prospects are worsening particularly for emerging and developing countries, including those in Africa. She noted that the global economic growth rate is expected to remain well below the 20-year pre-pandemic average of 3.8%, forecasting a continued slowdown in the world economy over the next five years.

However, she did not believe the global economy is heading toward a recession. She said, "Despite the rapid interest rate hikes by the U.S. Federal Reserve (Fed) and central banks worldwide over the past two years to combat inflation, the global economy has shown unexpected resilience," adding that it is "moving toward a soft landing." She pointed to the strong momentum in the U.S. and Indian economies and predicted that the global economy could avoid recession, slow down just enough to tame inflation, and gradually ease monetary policy, achieving a successful soft landing.

Nonetheless, she emphasized that monetary policy must remain tight. Georgieva stated, "Fighting inflation is the top priority," and warned that "inflation is likely to remain above central banks' target levels until 2025." She urged that "central banks need to maintain higher interest rates for a longer period." Given that inflation has not been fully controlled and could resurge at any time, she cautioned against hastily returning to monetary easing policies. She stressed, "Policymakers worldwide cannot afford to lower their guard in fighting inflation and preparing for financial system risks such as stress in the banking sector."

Foreign media have evaluated that the IMF’s outlook on the global economy has become more optimistic compared to the April Spring Meetings. At that time, Georgieva had warned that "if inflation becomes entrenched, interest rate hikes last longer, and financial sector stress worsens, the global economy could experience a hard landing."

The IMF-WB Annual Meetings will be held in Marrakech, Morocco, from the 9th to the 15th. The annual meetings of the IMF and WB, international economic organizations headquartered in Washington D.C. and led by the United States, are attended by central bank governors, finance and development ministers, legislators, private sector executives, civil society representatives, and scholars from around the world. The conference is expected to discuss inflation and the resulting tightening monetary policies, the prolonged impact of the Ukraine war, and the slowdown in China’s economic growth.

This content was produced with the assistance of AI translation services.