China to lift global growth amid uncertainty, IMF head says

China's economy is experiencing a strong rebound that will deliver a welcome lift to the world economy, contributing about one-third of global growth in 2023, said Kristalina Georgieva, managing director of the International Monetary Fund.

It is advisable for China to make more policy efforts to raise productivity and rebalance the economy away from investment and toward consumption-driven growth, which will be more durable and helpful to climate goals, Georgieva said at the China Development Forum 2023 in Beijing on Sunday.

China's economic rebound comes at a time when the global economic prospects remain challenging, according to Georgieva.

"For the world economy, however, spring is yet to come," she said, as uncertainties are exceptionally high due to the risks of geoeconomic fragmentation and rising financial instability at the time of higher debt levels.

The rapid transition from a prolonged period of low interest rates to much higher rates — which are necessary moves to fight inflation — inevitably generates stresses and vulnerabilities, as seen in recent developments in the banking sector of some advanced economies, Georgieva said.

Response actions taken by policymakers in advanced economies have eased market stress to some extent, but uncertainty remains high and underscores the need for vigilance, she said, adding that the IMF is assessing potential implications for the global economic outlook and financial stability, with a focus on low-income countries with a high level of debt.