(Singapore, Feb 14 2023) Following US economy likely avoiding recession and China’s reopening from pandemic controls, IMF said that financial markets have good reason to be more optimistic about the economy outlook.

IMF Managing Director Kristalina Georgieva, speaking at the World Government Summit, 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.

Positive factors were resilient US and EU labour markets, China’s reopening and “surprisingly good results of central banks tightening up financial conditions and inflation finally trimming down, although the fight is not yet won”, she added.

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.

“The markets have good reason to be more upbeat because what they are finally seeing is the US economy likely to avoid recession…they are also seeing China re-opening and Chinese consumers rushing to spend the money they saved during the pandemic, the lockdown,” she said.

The IMF chief was speaking in an onstage interview at the annual summit hosted by Dubai in the United Arab Emirates (UAE).