February 2, 2023

Athens News

News in English from Greece

IMF: recession will cover a third of the world in 2023

International Monetary Fund Managing Director Kristalina Georgieva predicts that a third of the global economy will be hit by recession this year.

In her opinion, in 2023 the world is waiting for an even “harder” year than all the previous twelve months, quotes financial times. According to Ms. Georgieva, the growth rate is simultaneously slowed down by the United States, EU and China. Noting that 1/2 of the EU economy will be stagnant, she says:

“We expect a third of the global economy to be in recession.”

In October, the IMF lowered its forecast for global economic growth until 2023, citing the ongoing fallout from the Russian war against Ukraine, as well as inflationary pressures and higher interest rates by major central banks.

Georgieva notes that the rapid spread of coronavirus in China now that the government has abandoned its tough policy of containment, means that the country is facing a new economic blow in the short term, and speaks of the difficulties ahead:

“The next few months will be difficult for China, and the impact on Chinese growth will be negative, and then the impact on the region will be negative, the impact on global growth will be negative. For the first time in 40 years, China’s annual growth is likely to be at or below global growth “This means that influence can drag down global economic activity rather than stimulate it. This has never happened before.”

Her words suggest that the IMF is likely to cut its economic forecasts for 2023 again. The fund usually publishes updated forecasts during the World Economic Forum in Davos, which will be held at the end of January. Georgieva also suggests that the US is likely to avoid the worst of the recession, thanks in part to a strong labor market.

Reference. A recession is a downturn in business activity that affects the entire economy and lasts more than six months. It manifests itself in a decrease in production volumes, a reduction in incomes of the population and an increase in unemployment.

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