According to the International Monetary Fund’s (IMF) chief, this year will see a third of the world’s economy in a recession. As the economies of the US, EU, and China slump, 2023 will be “tougher” than last year, according to Kristalina Georgieva. The global economy is currently being weighed down by the conflict in Ukraine, rising costs, higher interest rates, and the expansion of Covid in China. The IMF revised down its forecast for 2023 global economic growth in October.
“We expect one-third of the world economy to be in recession,” Ms Georgieva said on the CBS news programme Face the Nation.
“Even countries that are not in recession, it would feel like a recession for hundreds of millions of people,” she added.
An economist at Moody’s Analytics in Sydney named Katrina Ell provided the BBC with her analysis of the global economy.
“While our baseline avoids a global recession over the next year, odds of one are uncomfortably high. Europe, however, will not escape recession and the US is teetering on the verge,” she said.
In October, the IMF revised down its forecast for global economic growth in 2023 as a result of the conflict in Ukraine and higher interest rates as central banks around the world work to contain inflation. Since that time, despite the massive spread of coronavirus infections in the nation, China has abandoned its zero-Covid policy and begun to reopen its economy. China, the second-largest economy in the world, would likely have a difficult beginning to 2023, Ms. Georgieva predicted.
“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.
190 nations make up the IMF, an international organization. They cooperate in an effort to stabilize the world economy. Being a system for early economic warning is one of its most important functions. The remarks made by Ms. Georgieva will worry people all across the world, especially in Asia, which had a rough year in 2022.
Because of the conflict in Ukraine, inflation has been slowly increasing throughout the area, and higher borrowing rates have also hurt consumers and businesses. Data that was made public over the weekend indicated that the Chinese economy will be weak towards the end of 2022. President Xi Jinping called for more effort and cooperation as China enters a “new chapter” on Saturday in his first public remarks since the policy adjustment. Because of the US economy’s slump, there is also reduced demand for goods created in China and other Asian nations like Thailand and Vietnam. Because borrowing is more expensive and interest rates are higher, some businesses may decide not to invest in growing their operations. Investors may withdraw funds from an economy due to a lack of growth, leaving nations—particularly those that are poorer—with less money to pay for essential imports like food and energy.