The International Monetary Fund has warned of an impending recession that will hit one-third of the world in 2023.
The Managing Director, IMF, Kristalina Georgieva, disclosed this during an interview with CBS, an American broadcast television and radio network.
Georgieva stated that the economic activities in the United States, the European Union, and China were all slowing simultaneously. “We expect one-third of the world economy to be in recession,” the IMF Managing Director said. She stated that even for countries not in recession, it would feel like a recession for hundreds of millions of people.
She explained that the fast spread of Covid-19 in China, especially as its containment policy has been dropped, portends fresh economic problems in the short term. Earlier in October last year, the IMF projected global growth to be at 2.7 per cent this year, slowing from 3.2 per cent in 2022. “For the next couple of months, it would be tough for China, and the impact on Chinese growth would be negative, ‘’ Georgieva said adding that she expects the country to move gradually to a higher level of economic performance, and finish the year better off than it is going to start the year.
She added, “For the first time in 40 years, China’s annual growth is likely to be at or below global growth, meaning it could drag down worldwide economic activity rather than propelling it. That has never happened before.” Georgieva also noted that the US might escape the worst of the downturn, due to its strong labour market. “The US may avoid a recession because its unemployment is so low. If that resilience holds in 2023 the US would help the world to get through a very difficult year. The US economy is remarkably resilient,” she added.