According to Kristalina Georgieva, 2023 will be “more difficult” than last year, as the economies of the United States, the EU, and China are in a recession.
The global economy is currently weighed down by the conflict in Ukraine, rising costs, high-interest rates, and the expansion of COVID in China.
The IMF revised its global economic growth forecast for 2023 in October.
On CBS’ Face the Nation television program, Ms. Georgieva said “we expect a third of the global economy to be in recession”.
For hundreds of millions of people, it will look like a recession even in countries that don’t experience a recession, he continued.
In October, the IMF revised its forecast for global economic growth in 2023 following the conflict in Ukraine and rising interest rates as central banks around the world tried to stave off inflation, Katrina L said. ., an economist at Moody’s Analytics in Sydney. works for
Since then, China has abandoned its zero covid policy and started to reopen its economy, despite the massive spread of coronavirus infections in the country.
Ms. Georgieva predicted that China, the world’s second-largest economy, would have a rocky start to 2023.
He predicted that the coming months would be difficult for China, which would adversely affect the country’s progress as well as the region and the world as a whole.
190 nations make up the IMF, an international organization. They cooperate in an effort to stabilize the world economy. One of its most important functions is to have an economic early warning system.
Ms. Georgieva’s comments will worry people around the world, especially in Asia, where 2022 has been a difficult year.
Due to the conflict in Ukraine, inflation is slowly rising across the region, and high lending rates have also hurt consumers and businesses.
Data released over the weekend indicated that China’s economy will weaken by the end of 2022.
Factory activity in China shrank for the third straight month and at the highest rate in three years, the official Purchasing Managers’ Index (PMI) for December showed, as coronavirus infections spread at factories across the country.
In the same month, house prices in 100 cities fell for the sixth straight month, according to a survey by China Index Academy, one of the country’s largest independent property research firms.
President Xi Jinping called for more efforts and cooperation as China entered a “new chapter” on Saturday in his first public remarks after policy adjustments.
Due to the slowdown in the US economy, the demand for goods made in China and other Asian countries like Thailand and Vietnam has also declined.
Since borrowing costs more and interest rates are higher, some companies may decide not to invest in expanding their operations.
A lack of growth can cause investors to pull money out of the economy, leaving nations – especially poor ones – with less money to pay for essential imports such as food and energy.
The value of a currency against that of more prosperous economies can decline during these recessions, compounding the problem.
Sovereign economies are also affected by rising interest rates on debt, especially emerging markets, which may experience difficulty in servicing their debt.
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China has been a major trading partner in the Asia-Pacific region for many years and has also provided economic assistance in times of crisis.
Asian economies are currently facing the long-term financial consequences of China’s response to the pandemic.
As Beijing moves closer to Covid zero, production of goods such as Tesla electric vehicles and Apple’s iPhone could resume.
However, when inflation appears to be peaking, increased demand for commodities such as oil and iron ore is likely to push prices up.
The Covid limit in China is not a panacea. At least until the March quarter, the change will be difficult and will lead to volatility” Ms L.
Bill Blaine, strategist and head of alternative assets at Shard Capital, described the IMF warning as a good time to “wake up and smell the coffee”.
“We are not going to see interest rates come down as quickly as the markets expect,” he told Radio 4’s Today program. they are enough