For a large part of the global economy, 2023 will be a difficult year as the main drivers of global growth – the United States, Europe and China – Every experience dampens activity, warned the head of the International Monetary Fund.
The managing director of the International Monetary Fund, Kristalina Georgieva, said on CBS’ Sunday Morning News that the new year will be “tougher than the year we leave behind.” Face the nation Sunday.
Why? Because the three largest economies – the United States, the European Union and China – are all slowing down simultaneously.
We expect a third of the global economy to be in recession. She added that even countries that are not in a recession, it will feel like a recession for hundreds of millions of people.
In October, the International Monetary Fund lowered its forecast for global economic growth in 2023, reflecting continued pressure from the war in Ukraine as well as inflationary pressures and higher interest rates designed by central banks such as the US Federal Reserve to bring those price pressures to bear. heel.
China, the world’s second-largest economy, is likely to grow at or below global growth rate for the first time in 40 years as Covid-19 cases surge after dismantling its very strict anti-coronavirus policy, Georgieva said.
“For the first time in 40 years, China’s growth in 2022 is likely to be at or below global growth,” Georgieva said.
Moreover, “wildfires” from expected Covid infections there in the coming months are likely to further damage its economy and affect regional and global growth, said Georgieva, who traveled to China to work with the International Monetary Fund late last month.
“In the next two months, it will be difficult for China, the impact on Chinese growth will be negative, the impact on the region will be negative, and the impact on global growth will be negative,” she said.
Meanwhile, Georgieva said, American economy It stands aloof and may avert an outright downturn that could potentially afflict up to a third of the world’s economies.
She said that “the United States is the most resilient, and it may avoid a recession. We see that the labor market is still very strong.”
“This is … a mixed blessing because if the labor market is too strong, the Fed may have to keep interest rates tighter for longer to bring down inflation,” Georgieva said.
The US labor market will be a central focus for Federal Reserve officials who want to see labor demand slow to help reduce price pressures. The first week of the new year brings a slew of key data on the employment front, including Friday’s monthly nonfarm payrolls report, which is expected to show that the US economy minted another 200,000 jobs in December and the unemployment rate remained at 3.7% – close to from the lowest level since the 1960s.
Reuters contributed to this report
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