The International Monetary Fund (IMF) chief has warned that this year would be more difficult than 2022 for the majority of the global economy due to sluggish growth in the United States, the European Union, and China.
2023 will be a “difficult year,” according to IMF Managing Director Kristalina Georgieva, with one-third of the world’s economies predicted to be in recession.
“Why? Because the three major economies—the US, the EU, and China—are all slowing down at the same time, Georgieva said on Sunday’s episode of “Face the Nation” on CBS.
The comments follow the IMF’s October downgrade of its global GDP outlook from 2.9 percent to 2.7 percent due to factors such as the conflict in Ukraine and significantly rising interest rates.
According to Georgieva, China, the second-largest economy in the world, is set to expand at or below global growth for the first time in 40 years as COVID-19 instances rise as a result of the country’s rigorous “zero-COVID” policy being abandoned.
It’s never happened like that before. According to Georgieva, the easing of COVID limitations will result in wildfire COVID instances across China for three, four, five, and six months of the following year. “Last week, I visited China, staying in a bubble in the ‘zero COVID’ city. But once Chinese citizens start traveling, that won’t continue.
Although there are concerns about China’s longer-term trajectory, Georgieva stated that she anticipated China’s growth to improve before the end of the year.
“Prior to COVID, China would contribute 34, 35, or 40% of the global growth. It has stopped doing it. Actually, the Asian economies are under quite a bit of stress. What will happen with China? is the first thing every Asian leader asks me when we speak. Will China’s growth rate resume at a greater level?
According to Georgieva, the war in Ukraine has particularly hurt the EU, with half of the bloc anticipating a recession this year.
However, according to the head of the IMF, the US economy has distinguished itself for its resiliency and may completely avoid decline this year.
“The US is the most tough. Recession may not hit the US, she suggested.
“We anticipate continued strength in the labor market. This is a mixed blessing, though, as the Fed might need to keep interest rates higher for longer in order to reduce inflation if the labor market is very robust.
