DAVOS, Switzerland - International Monetary Fund (IMF) Managing Director Kristalina Georgieva said on Friday that the economic outlook was less bad than feared a couple of months ago.

Ms Georgieva told a panel at the World Economic Forum (WEF) annual meeting that what had improved was the potential for China to boost growth, and that the IMF now forecast Chinese growth of 4.4 per cent for 2023.

She said, however, she saw no “dramatic improvement” in the current IMF 2023 global growth forecast of 2.7 per cent.

Ms Georgieva said that the war in Ukraine remained a “tremendous risk” for confidence, particularly in Europe.

At the same panel discussion, European Central Bank President Christine Lagarde said policymakers mustn’t let up in their battle with inflation, even as the spike in prices appears to have peaked.

“We have to also stay that course of resilience that we observed in 2022,” Ms Lagarde told the panel.

“‘Stay the course’ is my mantra for monetary policy purposes.”

Ms Lagarde and some of her ECB colleagues have been pushing back against suggestions that the pace of rate hikes should be slowed following an expected half-point move next month.

While headline inflation has dipped back into single digits, underlying price gains reached a record in December.

The economy, meanwhile, is proving robust, despite rising interest rates.

Ms Georgieva also warned that Western subsidies to combat climate change and encourage the transition to clean energy sources risk hitting developing and emerging markets.

“My biggest concern is that something that in principle is very good to accelerate the transition to the green economy by using public money to step up private investment... may not serve well the emerging markets and the developing world,” she said.

She warned that the subsidies could lead to technology and production transfers from poorer emerging countries to the rich world.

“If we are to strive to get the industrialised world clean, and we don’t think about the emerging markets, we are all cooked,” she said. REUTERS, BLOOMBERG, AFP