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The IMF warns of a difficult year 2023 for the global economy

2023-01-01 22:08:17Kosova&Bota SHKRUAR NGA REDAKSIA VOX
The IMF warns of a difficult year 2023 for the global economy
Kristalina Georgieva

For much of the global economy, 2023 will be a difficult year as the main forces of global growth – the United States, Europe and China – face a slowdown in economic activity, International Monetary Fund Managing Director Kristalina said on Sunday. Georgieva.

The new year will be "more difficult than the year we left behind," Ms. Georgieva said in an interview on CBS' "Face the Nation."

"Why? Because all three major economies – the US, the EU and China – are slowing down at the same time,” she said.

In October, the IMF cut its forecast for global economic growth in 2023, reflecting the ongoing fallout from the war in Ukraine, as well as inflationary pressures and high interest rates set by central banks such as the United States.

Since then, China has abandoned its zero-COVID policy and embarked on a chaotic reopening of its economy, though consumers there remain cautious as coronavirus cases rise.

In his first public comments since restrictions were lifted, President Xi Jinping called on Saturday in a New Year's address for more effort and unity as China enters a "new phase".

"For the first time in 40 years, China's growth in 2022 is likely to be at or below global growth," Ms Georgieva said.

Additionally, an expected outbreak of COVID infections there in the coming months is likely to hit its economy further this year and slow regional and global growth, Ms Georgieva said.

"For the next couple of months, it will be difficult for China, and the impact on Chinese growth will be negative, the impact on the region will be negative, the impact on global growth will be negative," she said.

In its October forecast, the IMF pegged China's gross domestic product growth for last year at 3.2% – on par with the fund's global forecast for 2022. At the time, it also predicted that annual growth in China would accelerate in 2023 to 4.4%.

But her comments hint that at the World Economic Forum in Davos in Switzerland this month, the IMF will make another cut in its growth forecast for China and the global economy.

IMF Director Georgieva said the US economy could avoid the outright contraction that is likely to hit up to a third of the world's economies.

The United States has the greatest capacity for renewal, she said, and “can avoid recession. We see that the job market there remains quite strong."

But that fact itself poses a risk because it could hinder the progress the Central Bank needs to make to bring down US inflation from its highest level in four decades.

Inflation showed signs of peaking by the end of 2022, but remains almost triple the 2% target./VOA


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