IMF Managing Director Kristalina Georgieva said 2023 will be a “tough year”. One-third of the world’s economies are expected to be in recession.
The remarks come after the IMF in October cut its global growth forecast to 2.7 percent, down from 2.9 percent forecast in July, amid headwinds including the war in Ukraine and sharply rising interest rates.
China is likely to grow at or below global growth for the first time in 40 years. “That has never happened before. And looking into next year, for three, four, five, six months the relaxation of COVID restrictions will mean bushfire COVID cases throughout China,” Georgieva said. “I was in China last week, in a bubble in the city where there is ‘zero COVID’. But that is not going to last once the Chinese people start travelling.”
Meanwhile, the EU has been especially hard hit by the war in Ukraine, with half of the bloc expected to be in recession this year, Georgieva said.
IMF chief said “The US is most resilient. The US may avoid recession,”
“We see the labour market remaining quite strong. This is, however, a mixed blessing because if the labour market is very strong, the Fed may have to keep interest rates tighter for longer to bring inflation down.”
