Black Immigrant Daily News
Head of the International Monetary Fund (IMF) has said 2023 will be a “tough year”, with one-third of the world’s economies expected to be in recession.
Kristalina Georgieva, IMF Managing Director reckons 2023 will be tougher than the previous year for most of the global economy as the United States, European Union and China were all slowing down simultaneously.
Georgieva was speaking during an interview on ‘Face the Nation’, a CBS programme on Sunday.
In October 2022, the IMF cut its global growth forecast to 2.7 per cent, down from 2.9 per cent projection in July, amid headwinds including the war in Ukraine and sharply rising interest rates.
Georgieva told CBS that China, the world’s second-largest economy, is likely to grow at or below global growth for the first time in 40 years as COVID-19 cases surge following the dismantling of its ultra-strict “zero-COVID” policy.
“For the next couple of months, it would be tough for China, and the impact on Chinese growth would be negative, the impact on the region will be negative, the impact on global growth will be negative,” she said.
Notwithstanding, Georgieva said that she expected China’s growth to improve towards the end of the year but there are concerns about its longer-term trajectory.
Figures released over the weekend pointed to weakness in the Chinese economy at the end of 2022.
The official purchasing managers’ index (PMI) for December showed that China’s factory activity shrank for the third month in a row and at the fastest rate in almost three years as COVID-19 infections spread in the country’s factories.
On Saturday, in his first public comments since the change in policy, President Xi Jinping called for more effort and unity as China enters what he called a “new phase”.
According to Georgieva: “Before COVID, China would deliver 34, 35, 40 per cent of global growth. It is not doing it anymore. It is actually quite stressful for … the Asian economies. When I talk to Asian leaders, all of them start with this question, ‘What is going to happen with China? Is China going to return to a higher level of growth?”
At the same time, the EU has been especially hard hit by the war in Ukraine, with half of the bloc expected to be in recession this year, Georgieva said.
The IMF chief said, however, that the US economy has stood out for its resilience and could avoid contraction this year.
“The US is most resilient. The US may avoid recession,” she said.
“We see the labour market remaining quite strong. This is, however, [a] mixed blessing because if the labour market is very strong, the Fed (Federal Reserve) may have to keep interest rates tighter for longer to bring inflation down.”
The IMF is an international organisation with 190 member countries. They work together to try to stabilise the global economy.