IMF Chief Kristalina Georgieva sees hope in global fight against inflation

The International Monetary Fund (IMF)  Managing Director Kristalina Georgieva said there's a shred of growing evidence that the global inflation spike that’s triggered a cost-of-living crisis in many countries is waning.

According to her, financial markets have good reason to be more upbeat, pointing to the U.S. economy likely avoiding recession and China's reopening from pandemic controls.

At the World Government Summit on Monday, Georgieva described the IMF's outlook for 2023 as "less bad, not good" given that the Fund has forecast a slowdown in economic growth this year and inflation remained a concern, media reports suggested.

“We see inflation finally trimming down in quite a number of countries,” Georgieva told a conference in Dubai on Tuesday.

“The chance of finally getting on top of the problem of the cost of living being a major disrupter for millions and millions of people, we see light at the end of this tunnel.”

Many nations are reeling from inflation, higher interest rates, and elevated food and energy costs all while dealing with climate change and either slower growth or recession. Surging prices have forced central banks worldwide to tighten monetary policy.

Last month, the fund estimated world consumer-price increases would slow to 6.6 per cent this year, 0.1 percentage point higher than the October projection, following 8.8 per cent in 2022. It forecast further slowing to 4.3 per cent in 2024. Inflation rates are expected to be lower in about 84 per cent of countries in 2023 than in 2022.

In the same report, the IMF raised its global economic growth outlook for the first time in a year, with resilient US spending and China’s reopening buttressing demand against a litany of risks.

World gross domestic product will likely grow an estimated 2.9 per cent in 2023, 0.2 percentage points more than forecast in October. While that’s a slowdown from a 3.4 per cent expansion in 2022, the IMF said it expects growth will bottom out this year before accelerating to 3.1 per cent next year.

Asked whether there would be more doses of monetary tightening, Georgieva said the Fund expected monetary tightening this year but did not project it would continue "way into" 2024.

Georgieva lauded Gulf Arab oil and gas producers for "relentlessly" pursuing fiscal reforms, including diversifying revenue sources by introducing new taxes.