A third of global economy will experience recession this year: IMF Chief
- ByStartupStory | January 2, 2023
On Sunday, the head of the International Monetary Fund (IMF) expressed concern that a third of the global economy will be in recession by 2023.
In an interview, IMF Managing Director Kristalina Georgieva stated that this year will be “tougher” than 2022 because the US, European Union (EU), and China are all slowing down at the same time.
“We expect one third of the world economy to be in recession,” the BBC quoted Georgieva as saying to CBS News on Sunday.
“Even in countries that are not in recession, it would feel like a recession for hundreds of millions of people,” she added.
The IMF chief further warned that China, the world’s second largest economy, will face a difficult start to 2023.
“China has slowed down dramatically in 2022 because of this tight zero-Covid policy. For the first time in 40 years China’s growth in 2022 is likely to be at or below global growth. That has never happened before. 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.
The IMF cut its outlook for global economic growth in 2023 in October 2022 due to the Russia-Ukraine war, rising inflation, and the rigidity of interest rates by major central banks around the world.
In China’s case, Georgieva believes that the rapid spread of Covid following the end of the zero-Covid policy will result in a new economic blow in the short term. “China’s growth in 2022 is likely to be at or below global growth for the first time in 40 years,” she said.
According to Georgieva, the US may escape the global contractions due to its resilient labor market. She said, “The US economy is remarkably resilient (and) may avoid recession. We see the labor market remaining quite strong.”
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