IMF forecasts 2023 tougher for global economy than 2022

IMF warns a quarter of the world will face recession in 2023
United States,European Union and China will have slowed economic activities in 2023

A third of the global economy will be in recession this year, the head of the International Monetary Fund (IMF) has warned.Kristalina Georgieva said 2023 will be “tougher” than last year as the US, EU and China see their economies slow.

Georgieva said that China, the world’s second-largest economy, is likely to grow at or below global growth for the first time in 40 years as COVID-19 cases surge following the dismantling of its ultra-strict “zero-COVID” policy.

“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.”

“Before COVID, China would deliver 34, 35, 40 percent of global growth. It is not doing it anymore. It is actually quite a stressful for the Asian economies.

Georgieva said that she expected China’s growth to improve towards the end of the year but there are concerns about its longer-term trajectory. For the first time in 40 years, China’s growth in 2022 is likely to be at or below global growth,” Georgieva said.

It comes as the war in Ukraine, rising prices, higher interest rates and the spread of Covid in China weigh on the global economy.

“We expect one third of the world economy to be in recession.Even countries that are not in recession, it would feel like recession for hundreds of millions of people,” she added.

Katrina Ell, an economist at Moody’s Analytics in Sydney said,”While our baseline avoids a global recession over the next year, odds of one are uncomfortably high. Europe, however, will not escape recession and the US is teetering on the verge,” she said.

The IMF chief said, however, that the US economy has stood out for its resilience and could outright avoid contraction this year.“​​The US is most resilient. The US may avoid recession,” she said.