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The United States, China and Europe – the world’s three largest economies – are facing challenges and facing a recession, a report said.
The head of the International Monetary Fund (IMF), Kristalina Georgieva, said that the year 2023 will be a difficult year for the world as the economies of the United States, China and Europe are facing serious problems.
It would not be surprising to admit that “a third of the world’s economy will collapse in 2023”, he said, adding that even countries that were not at risk will face its challenges.
The World Bank is also concerned that “other crises” could cause the global economy to collapse in 2023, with smaller countries at risk.
The warning is contained in the summary of the annual report “Global Economic Prospects” which is due to be released on Tuesday and can be seen on the website of the group Open Knowledge Repository.
Even without another crisis, global growth this year is “expected to slow sharply, reflecting the stabilization of policies aimed at containing inflation, economic deterioration, and continued Russian interference in Ukraine,” the World Bank said.
“Urgent global and national efforts” are needed to reduce the risk of such a recession and debt crisis in emerging markets and developing countries (EMDEs), where economic growth is expected to remain below the last two decades, Washington. – said the lender.
“It is important for EMDE policymakers to ensure that any financial aid measures target vulnerable groups, that inflation expectations remain stable, and that economic activity remains strong,” he said.
Similar demands have been made by central banks around the world as they raise interest rates to ease price pressures while governments support businesses and households with electronic money.
International Monetary Fund managing director Kristalina Georgieva began 2023 with a warning that the world is facing “a tough year, tougher than the one we left behind.” One third of the global economy will collapse because the US, the EU and China are all shrinking at the same time, he told CBS’ ‘Face the Nation’ in an interview on Jan.1.
For the global economy, 2023 will be a difficult year because the main engines of global growth – the United States, Europe and China – are all facing weakening activity, the head of the International Monetary Fund said.
The new year will be “stronger than the year we left,” said IMF Managing Director Kristalina Georgieva on the CBS news program “Look with Color.”
“Why? Because the three major economies – the US, the EU and China – are all shrinking at the same time,” he said.
In October, the IMF lowered its outlook for global economic growth in 2023, citing the continuation of the war in Ukraine and lower prices and interest rates by central banks such as the US Federal Reserve aimed at bringing inflation pressures down. the heel.
Since then, China has abandoned its zero-covid-19 policy and begun to rebuild its economy, although consumers remain cautious as coronavirus cases rise. In his first public address since the policy change, President Xi Jinping on Saturday called in his New Year’s address for greater effort and cooperation as China enters a “new phase.”
“For the first time in 40 years, China’s growth in 2022 is expected to outpace or outpace the rest of the world,” Georgieva said.
In addition, the “wild fire” of the COVID-19 pandemic expected in the coming months is likely to overtake the economy this year and drag on regional and global growth, said Georgieva, who traveled to China on IMF business late last month.
“I was in China last week, in a city that has zero COVID,” he said. “But that doesn’t happen when people start walking.”
“For the next few months, it would be difficult for China, and the impact of China’s growth would be negative, the impact of the region would be negative, the impact of global growth would be negative,” he said.
In an October statement, the IMF pegged China’s output growth last year at 3.2 percent – based on the fund’s global outlook for 2022. At the time, it also saw China’s annual growth rate widen in 2023 to 4.4 percent as global activity takes hold. the whole world. He delayed further.
The comments, however, suggest further cuts in China and global growth could be on the horizon later this month when the IMF unveils revised forecasts at the World Economic Forum in Davos, Switzerland.
For now, Georgieva said, the US economy is on hold and could avoid a collapse that could affect a third of the world’s economy. “The US is stable,” he said, and “can avoid recession. We see the labor market is still strong.”
But that in itself carries risks because it could derail the progress the Fed needs to get US inflation back to the expected levels from the four-decade highs hit last year. Inflation showed signs of peaking by the end of 2022, but according to the Fed’s preference, it remains at about three times its 2 percent rate.