Recession To Hit One-Third Of World Economy In 2023, Warns IMF Chief Kristalina Georgieva

Kristalina Georgieva, head of the International Monetary Fund (IMF), predicted that this year would see a third of the world's economies in recession and warned that 2023 would be "tougher" than the previous year due to the declining economies of the United States of America, the European Union, and China. Georgieva made the claims on Sunday (January 2) during her appearance on the CBS news show 'Face the Nation'.

Quivering Economies

The state milieu of recession is probable when the Russia-Ukraine war has shown no signs of ending even after ten months, a recent sharp spike in COVID-19 cases in China, spiralling inflation and rising interest rates, reported the Economic Times. The IMF modified its projection for global economic growth in 2023 in October, taking into account the adverse effects of the Russia-Ukraine conflict, inflationary pressures, and the high-interest rates imposed by central banks to quell those price pressures.

Georgieva, during the show, stated for hundreds of millions of people, it would feel like a recession, even in nations that are not experiencing one, she said. In a tweet she sent later from her official Twitter page, she said that the silver lining is the opportunity to use this recession period to transform economies and boost the change that is good for the world climate and global growth.

2023 will be a difficult year for the world. The silver lining is we can use it to transform economies & accelerate change that's good for our climate, good for growth. At the IMF, we recognize our responsibility to be a force for good. Watch the event: https://t.co/Yv1TvfCytH pic.twitter.com/lsrXDDLNyy

— Kristalina Georgieva (@KGeorgieva) December 29, 2022

When China Sneezes

Georgieva predicted that the coming months would be difficult for China, negatively impacting the country's progress and that of the entire world.

After a surge of anti-government protests, China, in early December, abandoned key parts of its stringent zero-COVID policy. According to Georgieva, China, the second-largest economy in the world, is projected to grow at or below global growth for the first time in 40 years as COVID-19 cases may rise now that the zero-Covid policy is being abandoned.

Meanwhile, Georgieva said, the US economy is holding its own and may avoid the outright recession that is projected to affect as much as a third of the world's countries. She said the US "is most resilient" and "may avoid recession". The labour market is still expected to be relatively robust. According to her, this is "a mixed blessing", since if the labour market is particularly strong, the Federal Reserve might need to maintain higher interest rates for longer to reduce inflation.

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