While the world economy is walking a fine line between recession and soft landing this year, numerous developments ensure that the year starts with optimistic expectations. The opening of the Chinese economy earlier than expected, the very measured start of the winter season despite the flurry of power crisis, and the slowdown in inflation in the USA are among these developments.
However, the Fed, the European Central Bank and several central banks’ plans to continue to raise interest rates continue to raise concerns for the remainder of the year. “The road to a soft landing is narrow,” said Jan Hatzius, Chief Economist at Goldman Sachs. “It’s going to be a challenge for policy makers to adjust how restrictive they should be,” he said.
China’s call to open economy
However, Hatzius noted that he believes central banks can achieve this. The International Monetary Fund (IMF) also invited China to continue the process of opening up the economy.
IMF Leader Kristalina Georgieva stated yesterday that China’s normalization from zero-Kovid policy is the most valuable development for 2023 global growth. Georgieva said she expects if there is a slowdown in the United States, the world’s largest economy, it will be in moderation.
The IMF Leader said that central banks should continue to tighten their monetary policies to deal with persistent inflation.