Kristalina Georgieva, International Monetary Fund Managing Director, warns about a tougher time coming for the global economy. She said, “a tough year, tougher than the year we leave behind,” is to come.
In an interview aired on Jan 1, she told the CBS’s ‘Face the Nation’, “We expect one-third of the world economy to be in recession. Why? Because the three big economies — US, EU, China — are all slowing down simultaneously.”
The IMF already warned in October that more than one-third of the world economy will contract and there is a chance of global GDP growing less than 2% in 2023. It defines this as a global recession.
Georgieva painted a mixed picture, examining the three biggest economies on CBS, about their ability to withstand the downturn.
She says, while “the US may avoid recession”, the European Union has been “very severely hit by the war in Ukraine – half of the EU will be in recession next year.” At the same time China faces a “tough year.”
“That translates into negative trends globally — when we look at the emerging markets in developing economies, there, the picture is even direr,” she said.
The outlook for the world’s largest economy may still offer respite. “If that resilience of the labor market in the US holds, the US would help the world to get through a very difficult year,” Georgieva said.