The head of the International Monetary Fund, Kristalina Georgieva, has said a third of the global economy will be in recession this year and warned that 2023 will be "tougher" than last year as the United States, the European Union and China will see their economies slow. "Even in countries that are not in recession, it will look like a recession to hundreds of millions of people."
The head of the International Monetary Fund said on Sunday that 2023 will be a difficult year for much of the global economy as the main engines of global growth, the United States, Europe and China, all see sluggish activity.
International Monetary Fund Managing Director Kristalina Georgieva said on Sunday morning on CBS's news programme "Face the Nation" that the new year will be "tougher than the year we left behind."
"We expect a third of the global economy to be in recession. Why? Because the big three economies - the United States, the European Union and China - are slowing down simultaneously," she said.
In October, the International Monetary Fund lowered its forecast for global economic growth in 2023, reflecting the continued pressure of the war in Ukraine, as well as inflationary pressures and higher interest rates engineered by central banks like the Federal Reserve of US to bring those price pressures to bear heel.
China has since scrapped its "covid zero" policy and embarked on a chaotic reopening of its economy, though consumers remain wary as coronavirus cases rise. "For the first time in 40 years, China's growth in 2022 is likely to be equal to or less than global growth," Georgieva said.
In addition, Georgieva, who traveled to China to work with the International Monetary Fund late last month, said a "wildfire" from expected COVID-19 infections there in the coming months would likely hurt its economy this year and affect the regional and global growth. “I was in China last week, in a bubble in a city where there is no covid,” she said. "But that won't last once people start traveling."
It will be challenging for China during the next two months, she predicted, and this would negatively affect Chinese economy as well as regional and global growth.
In the meantime, Georgieva said, the US economy stands out and may avoid a full-blown recession that could hit up to a third of the world's economies. "The United States is the most resilient and can avoid a recession," she asserted. We see that the labor market continues to be very strong."
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