The head of the International Monetary Fund has predicted that 2023 will be a difficult year for a large portion of the global economy. As the United States, Europe, and China all face a decline in economic activity.
IMF managing director Kristalina Georgieva stated on the CBS Sunday. Morning news show Face the Nation that the upcoming year will be “more difficult than the year we leave behind.”
“Why? Because the United States, the European Union, and China are concurrently slowing down,” she explained.
We anticipate that one-third of the global economy will be in recession. Even in countries that are not in recession, hundreds of millions of people would experience recession-like conditions, she added.
In October, the IMF lowered its forecast for global economic growth in 2023. Its reflecting the continued drag from the conflict in Ukraine as well as inflationary pressures and the high-interest rates manufactured by central banks such as the Federal Reserve to tame inflationary pressures.
China, the world’s second-largest economy. It is expected to develop at or below the global average for the first time in 40 years. As a result of the rise in Covid-19 cases following the dissolution of its ultra-strict zero-Covid policy, as stated by Georgieva.
“In 2022, China’s growth is projected will at or below the world average for the first time in forty years,” Georgieva added.
In addition, a “bushfire” of anticipated Covid infections in the coming months. It will likely have a further negative impact on China’s economy. And regional and global growth, said Georgieva, who traveled to China late last month on behalf of the IMF.
She stated, “The next several months will be difficult for China. And the impact on the Chinese economy will be negative As will the impact on the region and world growth.”
People enjoying the sun on a packed Brighton beach in the United Kingdom earlier this year. With the Met Office predicting that next year would be one of the hottest on record.
In the meantime, according to Georgieva, the US economy stands apart and may avoid the outright recession. That is expected to affect as much as one-third of the global economy.
She stated that the United States is the most resilient nation and that it may avoid recession. We expect the labor market to stay extremely robust.”
“This is… a mixed blessing, because if the labor market is robust. The Fed may have to maintain higher interest rates for a longer period to reduce inflation,” Georgieva explained.
The US labor market will be a major focus for Federal Reserve officials. Who would want to see labor demand decline to reduce inflationary pressures.
Friday’s monthly nonfarm payrolls report is likely to reveal that the US economy created an additional 200,000 jobs in December. And that the unemployment rate remained at 3.7% – around the lowest level since the 1960s.
