According to Kristalina Georgieva, the managing director of the International Monetary Fund, the world economy will be more difficult in 2023 than it was in 2018.
She claims that this is the case because a third of the global economy, which includes China, Europe, and the United States, is expected to develop more slowly.
“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.
In October 2022, the IMF revised its estimate for global growth downward to 2.7% from 2.9% in July of the same year.
The head of the IMF highlighted that due to a rise in COVID-19 cases following the relaxation of the nation’s rigors COVID-19 laws, China, the second-largest economy in the world, will grow at or below global growth for the first time in 40 years.
“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.
She continued by saying that this year’s recession is anticipated to affect almost half of the European Union.
The head of the IMF said that the US may avoid recession in this particular circumstance.
“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.”
