According to the president of the International Monetary Fund (IMF) one-third of the global economy will be in recession. The coming year will be “tougher than the year we leave behind,” according to Kristalina Georgieva. The IMF chief stated on CBS’s “Face the Nation” news program that one-third of the world would be in recession this year.
The trend in China is concerning
The year 2022 concluded with more questions than answers. With COVID infections on the rise in China and the Federal Reserve of the United States predicting the benchmark policy rate to cross 5%, the economic prognosis for 2023 appears bleak. The trend in China is concerning, as the Asia-Pacific region has traditionally relied on China. This could, however, open up new opportunities for New Delhi in the region.
Economic activity in the United States, Europe, and China is slowing
Georgieva spoke openly about the IMF’s prognosis for this year during her chat with Margaret Brennan. According to her, this year will be more difficult than the previous one because “the three largest economies—the United States, the European Union, and China—are all slowing down at the same time.” She blamed the downturn on the Ukraine conflict, increased costs, higher interest rates, and COVID in China.
In October, the IMF reduced its growth projections for 2023
According to the IMF chief, one-third of the global economy will be in recession. “Even countries that are not in recession, it would feel like a recession for hundreds of millions of people,” said Georgieva. The group reduced its forecast for global economic growth in 2023. According to the World GDP Outlook Report, economic growth in 2023 would be 2.7%, down from 3.2% in 2012.
COVID infections will have an impact on China’s growth
Georgieva chose China to experience the most difficult circumstances among the major economies. She predicted that China’s growth in 2022 would be lower or equal to global growth for the first time in 40 years. The “bushfire” of COVID infections in the next months is anticipated to have an impact on its economy and harm both regional and global growth.
The United States may avoid a recession according to Georgieva
The US economy, according to the IMF’s managing director, is the “most resilient.” “It may avoid recession,” she remarked. “We believe the labor market will continue pretty strong,” Georgieva said.
“This is … a mixed blessing because if the labor market is very strong, the Fed may have to keep interest rates tighter for longer to bring inflation down.”