One third of world economy expected to be in recession in 2023, says IMF chief

Kristalina Georgieva, chief of the International Monetary Fund (IMF), warned that this year will be more difficult for the global economy than any one before it.

“Why? “Why? Because the three major economies, US, EU and China are all slowing down simultaneously,” she stated in an interview on CBS Sunday.

She said that “We expect one-third of the world’s economy to be in recession,” and that even countries that aren’t in recession, it would still feel like recession for hundreds upon millions of people.

The US might be able to avoid a recession, but Europe is more vulnerable, as it has been hard hit by the war in Ukraine. Georgieva said that half of the European Union would be in recession.

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Global growth is projected to slow from 3.2% in 2022 by the IMF, according to current projections.

Globally, the deceleration in China is going to have devastating consequences. China’s second-largest economy suffered a dramatic decline in 2022 due to its strict zero-Covid policy. This left China out of tune with the rest, disrupting supply chains, and causing disruptions to trade and investment.

Xi Jinping, the Chinese leader, stated this weekend that he expects China’s economy will have grown by at least 4.4% in 2017. This figure is much higher than many economists predicted and much lower than the 8.4% rate of growth seen in 2021.

Georgieva stated that China’s growth in 2022 will be the highest in 40 years. “Before Covid China would have delivered 34, 35 and 40% of global growth. She said that China is no longer doing this and added that it was “quite stressful” for Asian economies.

“When I speak to Asian leaders, they all start with the question: “What’s going to happen to China?” She asked, “Is China going back to a higher degree of growth?”

Beijing lifted Covid restrictions in December. However, it is likely that the global economy will be relieved by its reopening. The recovery process will be slow and difficult.

China’s chaotic reopening of its borders has unleashed a flood of Covid cases, which have overloaded the health system and lowered consumption and production.

Georgieva stated that the next few months will be “tough for China”, and that the impact on Chinese growth could be negative. She also said she expected the country to gradually move to a “higher degree of economic performance” and end the year in a better position than it started.