IMF Warns of Tough Year Ahead for World Economy Citing Slowdown in US, EU, China
The International Monetary Fund (IMF) has warned that 2023 will be a tougher year for most of the world economy because the U.S., EU, and Chinese economies are all slowing down simultaneously. “We expect one-third of the world economy to be in recession … Even countries that are not in recession, it would feel like recession for hundreds of millions of people,” said IMF chief Kristalina Georgieva.
IMF’s 2023 Economic Predictions
International Monetary Fund (IMF) Managing Director Kristalina Georgieva shared the IMF’s predictions on the U.S., the EU, China, and the world economy in an interview with CBS, aired Sunday. She detailed:
This is what we see in 2023. For most of the world economy, this is going to be a tough year, tougher than the year we leave behind. Why? Because the three big economies, U.S., EU, China, are all slowing down simultaneously.
“The U.S. is most resilient. The U.S. may avoid recession. We see the labor market remaining quite strong. This is, however, 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,” the IMF chief continued.
“The EU was very severely hit by the war in Ukraine. Half of the European Union will be in recession next year. China is going to slow down this year further,” she added.
Moreover, the IMF boss said:
Next year will be a tough year for China. And that translates into negative trends globally.
“When we look at the emerging markets in developing economies, there, the picture is even direr. Why? Because on top of everything else, they get hit by high interest rates and by the appreciation of the dollar. For those economies that have high level of that, this is a devastation,” she cautioned.
Regarding China specifically, Georgieva described: “In the short term, bad news. 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.”
Emphasizing that she hopes the U.S. economy “is not going to slip into recession despite all these risks,” the IMF managing director shared:
We expect one third of the world economy to be in recession … Even countries that are not in recession, it would feel like recession for hundreds of millions of people.
Georgieva added that “the world has changed dramatically,” noting that “it is a more shock-prone world.” She explained that these shocks include Covid, the Russia-Ukraine war, and the cost of living crisis.
“My message [is] don’t think that we are going to go back to pre-Covid predictability. More uncertainty, more overlap of crises wait for us … We have to buckle up and act in that more agile, precautionary manner,” she concluded.
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