The Managing Director of the International Monetary Fund, Kristalina Georgieva, has stated that the global economy in 2023 will be tougher in comparison to the previous year.
According to her, this is because one-third of the world economy including America, Europe, and China are projected to witness slowed growth.
“Why? Because the three big economies, [the] US, EU, China, are all slowing down simultaneously,” Georgieva said during an appearance on the CBS programme “Face the Nation” on Sunday.
The IMF in October 2022 cut its global growth forecast to 2.7% down from a 2.9% forecast in July that same year.
The IMF boss noted that China which is the world’s second-largest economy will grow at or below global growth for the first time in 40 years as COVID-19 cases increase following the easing of the country’s strict COVID-19 policies.
“That has never happened before. And looking into next year, for three, four, five, six months the relaxation of COVID restrictions will mean bushfire COVID cases throughout China.”
“I was in China last week, in a bubble in the city where there is ‘zero COVID’. But that is not going to last once the Chinese people start travelling,” she added.
She however expressed optimism that China’s economy will improve towards the end of 2023.
“Before COVID, China would deliver 34, 35, 40 percent of global growth. It is not doing it anymore. It is actually quite a 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?” she is quoted in a report by Asaaseradionline.com.
She added that about half of the European bloc is expected to go into recession this year.
In the case of the US, the IMF boss noted that the country may avoid recession.
“The US is most resilient. The US may avoid recession”
“We see the labour market remaining quite strong. This is, however, [a] mixed blessing because if the labour market is very strong, the Fed may have to keep interest rates tighter for longer to bring inflation down.”