A third of the world economy will be in recession this year, the head of the International Monetary Fund (IMF) warned on Monday. Kristalina Georgieva has declared that 2023 will be “tougher” than last year as the US, EU and china slow down. A juncture that occurs when the war in Ukraine, rising prices, higher interest rates and the spread of Covid in China wreak havoc on the world economy.
In fact, she forecasts that half of the countries in the European Union, whose economies are “severely impacted” by the war in Ukraine, will enter a recession in 2023. Instead, the managing director sees the US economy as more “resilient” and he trusts that the strength of his labor market will help him “avoid the recession” and even to “sustain the world in a very difficult year”.
“We expect a third of the world economy to be in recession,” Georgieva said on CBS’s Face the Nation news program. “Even countries that are not in recession, Hundreds of millions of people would feel in recession,” he added. The financial body cut its outlook for world economic growth in 2023 in October, due to the war in Ukraine as well as interest rates. higher as central banks around the world continue to try to control rising prices.
Global prospects are negative, especially in Asia. The IMF leader has warned that China, the world’s second-largest economy, will face a rather difficult start to this year. “Over the next few months, it will be difficult for China and the impact on Chinese growth will be negativethe impact on the region will be negative, the impact on global growth will be negative,” he announced. Figures released over the weekend pointed to a weak Chinese economy at the end of 2022 and the official Purchasing Managers’ Index (PMI) for December showed China’s factory activity contracting for the third straight month and at the fastest pace in nearly three years as infections by coronavirus were spreading in the country’s factories.
In the same month, home prices in 100 cities fell for the sixth consecutive month, according to a survey by one of the country’s largest independent real estate research firms, China Index Academy. On Saturday, in his first public comments since the policy change, President Xi Jinping called for more effort and unity as China enters what he called a “new phase.” The recession in the US also means there is less demand of products made in China and other Asian countriesincluding Thailand and Vietnam.
The impact of higher interest rates on loans also affects economies at the government level, especially emerging markets, which may find it difficult to service their debts. For decades, the Asia-Pacific region it has depended on China as its main trading partner and for economic support in times of crisis.
