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US President Joe Biden and International Monetary Fund chief Kristalina Georgieva have both brushed off the threat of an impending economic crisis after a week of worries in financial markets about stagflation.

“For some countries there is now an increased risk of recession, but we don’t expect a global recession,” Georgieva told Francine Lacqua on Bloomberg Television during an interview at the World Economic Forum in Davos, Switzerland. Biden said “no” when asked by a reporter if such an outcome was inevitable for the United States.

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The upbeat comment from two of the world’s economic guardians sparked more upbeat investor sentiment on Monday after a week of volatility that sparked concern from Group of Seven finance ministers and saw the S&P 500 steer clear of just a close of the bear market on Friday. .

“Our GDP is going to grow faster than China’s for the first time in 40 years,” Biden said after meeting Japanese Prime Minister Fumio Kishida in Tokyo. “Does that mean we don’t have any problems?” We do. We have problems that the rest of the world has. But less important than the rest of the world, due to our internal growth and strength.

Georgieva acknowledged that the IMF predicts weaker growth for the world than it forecast last year, and said there is a risk of further downgrades. Still, she observed, the fund’s forecast of 3.6% for 2022 was in line with the average of the previous decade.

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Many participants from the Swiss mountain resort of Davos are less optimistic. While they relished the Forum’s first in-person meeting since the pandemic began, they see a unique set of new challenges that threaten to strain economies and hurt living standards.

Fatih Birol, executive director of the International Energy Agency, told Bloomberg Television that there is a risk of a global recession if oil producers do not help contain prices.

“This cost of living crisis could lead to the worst economic and social challenges we have seen in four or five decades,” David Nabarro, special envoy for Covid-19 at the World Health Organization, said at the launch. from the Edelman Trust Barometer in Davos.

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German Economy Minister Robert Habeck said the war in Ukraine reflected how Russian President Vladimir Putin was using hunger as a weapon, while Davide Serra, chief executive of Algebris Investments, called the atmosphere in Davos of “sad” because of the conflict. .

“Three hours from now, people are dying and shooting each other,” he told Bloomberg Television. “And so I think that’s why it’s different.”

Serra also predicted that US equities should fall further as earnings expectations are still too high.

Another optimistic voice in Davos was Jason Furman, a Harvard University professor and former White House economic adviser, who told Bloomberg TV he saw only a 20% chance of a US recession this year. next.

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“Consumers are still spending a lot, there are people leaving the sidelines for jobs, there’s more inventory restocking to do,” he said. “When dealing with this year, that’s where I worry the most. That’s when the Fed rate hikes start to kick in.”

Away from the mountains, data released on Monday also provided grounds for hope for global growth, with a surprisingly upbeat publication from Germany’s Ifo institute in Munich showing higher confidence and business expectations among companies in the biggest economy of Europe. “There are currently no observable signs of a recession,” Chairman Clemens Fuest said in a statement.

It was in Germany that G-7 finance ministers met last week to discuss the state of the world. Although they worry about stagflation, they have also shown their shared determination to keep global growth on track, pledging “to drive a strong, sustainable, balanced and inclusive global recovery”.

It’s such a sentiment that Georgieva captured when she stressed that all is not lost if countries and policymakers work together, highlighting the experience of the pandemic.

“International cooperation is good for everyone,” she said. “We could have been in a Great Depression – but we are not.”

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