The IMF thinks we may actually skirt a recession. It is also surprisingly upbeat about Russia's economy.

• The IMF expects the world economy to grow 2.9% in 2023 — which is better than its October forecast of 2.7%.
• Growth is expected to be supported by strong labor markets and household consumption, and China's reopening.

The world economy may actually not be as bad as it seems, the International Monetary Fund said Monday, as it upped its global growth forecast to 2.9% in 2023.

While that's still slower than the pace of growth in 2022 at 3.4%, it's an improvement from the IMF's October forecast of a 2.7% rise. Strong labor markets, increased household consumption and business investment, and China's economic reopening from the COVID-19 pandemic, all contribute to the cheery outlook.

"We're well away from any kind of global recession marker," Pierre-Olivier Gourinchas, the IMF's chief economist, told Bloomberg on Tuesday.

"This time around, the global economic outlook hasn't worsened. That's good news, but not enough. The road back to a full recovery, with sustainable growth, stable prices, and progress for all, is only starting," Gourinchas also wrote in a Monday blogpost.

The IMF highlighted India and China as bright spots in the global economy. The two countries account for half of global growth in 2023, Gourinchas added in his blogpost. The US and Euro-zone will collectively account for just one-tenth of growth.

And it also seemed surprisingly upbeat about the Russian economy — it expects the economy to grow, even amid sweeping sanctions against Moscow over the Ukraine war and a $60 a barrel price cap for its crude oil exports — suggesting the restrictions are not that effective.

The IMF expects Russia's economy to expand 0.3% in 2023 and 2.1% in 2024 — a stark reversal from an expected 2.2% contraction in 2022. The IMF had predicted in October that Russia's economy would contract by 3.4% in 2022.

"At the current oil price cap level of the Group of Seven, Russian crude oil export volumes are not expected to be significantly affected, with Russian trade continuing to be redirected from sanctioning to non-sanctioning countries," according to the IMF.

The fund told Reuters that Russia's economy was supported by a "fairly high" export revenue in 2022 and robust fiscal stimulus in part from military spending.

However, the country is still expected to post a a decline in growth in the medium term due to the Ukraine war, Petya Koeva-Brooks, deputy director of the IMF's research department, told the news agency.