That recession will affect a third of them this year global economycorresponding Kristalina GeorgievaExecutive Director of the International Monetary Fund (IMF), who also warned that the world faces a “tougher” year in 2023 than the previous 12 months.
This is because the economies of the United States, European Union and China are all slowing down at the same time. “We expect a third of the global economy to be in recession,” Georgieva told CBS.
Furthermore, he added that while the US could avoid a recession, the situation in Europe looks bleaker, which has been badly hit by the war in Ukraine. “Half the European Union will be in recession,” he said.
In the case of China, Georgieva said the rapid spread of COVID-19 in that country – after its President Xi Jinping abandoned the country’s tough containment policy – means it is suffering another economic hit in the short term.
“For the first time in 40 years, China’s growth in 2022 is likely to be equal to or below global growth,” Georgieva said. “Before COVID, China generated 34%, 35%, 40% of global growth. That’s no longer possible,” he said. He added that it was a “quite stressful” time for Asian economies.
However, according to the IMF official, the US should avoid the worst of the recession thanks in part to its strong labor market. The United States “can avoid a recession” because its unemployment rate is so low, he said. “If that resilience continues (in 2023), the United States would help the world get through a very difficult year,” he said.
It is worth remembering that the IMF cut its outlook for 2023 global economic growth to 2.7% in October, citing the ongoing burden of the war in Ukraine as well as inflationary pressures and rising interest rates from major central banks.