Prospects for the global economy have brightened amid signs that inflation is retreating from its four-decade high, the head of the International Monetary Fund has said.

Speaking at the closing session of the World Economic Forum in Davos, Kristalina Georgieva said growth prospects had picked up in recent months but warned against overoptimism, according to The Guardian.

“My message is that it is less bad than we feared a couple of months ago but that doesn’t mean good. What has improved is that inflation seems to be leaning in the right direction — that is down.”

Georgieva’s remarks followed recent falls in annual inflation rates in the U.S., the eurozone and the U.K. The IMF will release updated forecasts for the global economy at the end of the month and the IMF managing director hinted there would be a small upgrade to her organization’s current forecast of 2.7% growth for 2023.

The prospects for China had brightened since the abandonment of the zero-COVID strategy, while strong labor markets had boosted consumer spending.

But Georgieva added it would still be a painful year for people around the world, and there was a risk stronger growth in China would boost energy prices and make the fight against inflation harder.