Walk us through your forecast and the reasons why you have upgraded it and
possibly the opportunity to upgrade, then upgrade its forecast again soon.
Well, thank you for having me, and what we are looking at is what effectively is
going to be still a challenging year. I mean, what we are projecting for 2023
is two point nine percent growth, then rebounding to three point one in 2024.
These are still relatively low growth numbers for the global economy, well
below what we averaged from 2000 to 2019, for instance.
But still, it's an upgrade compared to what we were expecting back in October.
And this is due to resilience, resilience, resilience.
We've had more resilient households in the US and businesses as well.
We've had resilience to the energy crisis in Europe.
A lot of economies have done better than was initially expected.
Labor markets have been very, very tight in many emerging and advanced economies
as well. And then in addition to all this, you
have the reopening of the Chinese economy that is promising to give a
boost to global activity in 2023. Now that resilience, spirit Libya is
making the job of central bank is perversely harder here.
What's your take? Well, there is a little bit of good news
on the inflation front, but we should not exaggerate it.
So what we are seeing is that global inflation headline, inflation has peaked
already in 2022 and is coming down in the vast majority of countries.
The worry is more with what we call core inflation that excludes energy and food
prices are typically more volatile. And this core inflation measures have
shown more persistent and they have not peaked yet in many countries and they
are still far away from central bank targets.
So the job is not done. And you are right to point out that more
resilience on activity could mean more price pressures could mean that it's
harder for central banks to bring down inflation to target and therefore they
might need to do more. I think that your boss could see the
gasoline, Georgieva said. Of course, the Covid,
which I say the post Covid 0. China is going to perhaps be one of the
impetus for growth, as you've just alluded to, but it's also could be the
next sort of inflation headache as well. Well, similarly, as the Chinese economy
reopens, Stutz could have put pressure on a number of primary commodities
markets, energy markets, cetera. But let's keep in mind that even with
China's reopening and we are grading China quite a bit, we are projecting 5.2
percent growth in 2023. That's a zero point eight percentage
point upward revision for China for for this year.
It's still the global economy is slowing down.
And in terms of the overall demand, demand for energy and commodities, that
is really what is going to be the driving force.
So China is doing better, but the global economy is still cooling off.
And in our projections, we are factoring in that we anticipate we expect prices
of energy and and other commodities to actually decline through the year.
Now, you've also highlighted that the risks do remain to the downside.
Why? Well,
I've mentioned already that we are far from having won the fight against
inflation. That could be a lot more persistence in
inflation. We've had a few good points.
It's encouraging. It's in the right direction.
But let's not think that somehow the job is done far from it.
There could be price pressures that could be.
Wage pressures. There could be an escalation of the war
in Ukraine. That again, sends energy and commodity
prices to the roof. So there are a number of factors that
could complicate the outlook in 2023, and that would make potentially a
recession more likely. A global recession more likely may
require more tightening by central bank. We could have also a tightening of
financial conditions. So far, this has not happened too much,
but this is a new environment. We have to be very vigilant in terms of
the vulnerabilities in the financial markets, in the nonbank financial
institutions and the housing sector. This tightening of policy rates by
central bank is something that is really changing the environment here.
And we have to be very careful.