A third of the world’s economy is predicted to fall into recession by 2023, as per IMF Chief.
This year will be more difficult for our global economic system than the one we left behind, according to the IMF’s (IMF) director Kristalina Georgieva has warned.
“Why? because the three major economies, US, EU, China are all slowing simultaneously,” she said in an interview which was broadcast in the Sunday edition of CBS Sunday.
“We expect one third of the world economy to be in recession,” she added, noting that even for those countries that aren’t currently in recession “It would feel like recession for hundreds of millions of people.”
While the US might be able to avoid recession, the picture appears more dire in Europe as it has been severely impacted by the conflict in Ukraine She stated. “Half of the European Union will be in recession,” Georgieva said.
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The IMF is currently forecasting global growth to be 2.7 percent in 2018 which will slow from 3.2 percent in 2022.
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The slowdown in China will have a significant global impact. China, the second-largest economy in the world, suffered a dramatic decline in 2022 as a result of its stifling zero-Covid policies which put China in a complete disconnect with the world at large, disrupting supply chains, and affecting the movement of trade and investment.
Chinese president Xi Jinping said this weekend that he expects China’s economy would have grown by at least 4.4 percent in the past year, which is more than most economists forecast, but still smaller than the 8.4 percent growth rate for 2021.
“For the first time in 40 years China’s growth in 2022 is likely to be at or below global growth,” Georgieva declared. “Before Covid, China would be able to deliver 34or 35 percent and 40 percent of global growth. The country isn’t delivering any more,” she said, noting that it’s “quite an incredibly difficult” time to Asian economies.
“When I meet with Asian leaders they all begin with the question “What’s going to happen in China? Do you think China is returning to a higher rate of growth or will it slow down?’ ” she said.
Beijing removed Covid restrictions in the beginning of December. While the reopening of Covid could provide needed relief to world economies, its growth will be uneven and difficult.
The haphazard opening of China has triggered an avalanche of Covid cases that have flooded the health system, reducing production and consumption through the process.
