By Emily Hawkins
A third of the world economy will be in recession this year, according to a bleak warning from the boss of the International Monetary Fund (IMF).
Although some countries will dodge recession, “it would feel like recession for hundreds of millions of people,” in those places also, Kristalina Georgieva said.
The IMF managing director said 2023 was set to be “tougher” than the year just gone as the three major economic engines – the US, EU and China – are marking economic slowdowns.
“We expect one third of the world economy to be in recession,” Georgieva told the CBS news programme Face the Nation.
The global economy is currency battling the fallout from the war in Ukraine, surging prices, higher interest rates and a Covid wave in China.
“For the first time in 40 years, China’s growth in 2022 is likely to be at or below global growth,” Georgieva said.
China is experiencing a surge in Covid-19 infections and has scrapped its zero-Covid policy, suddenly lifting many social restrictions.
“For the next couple of months, it would be tough for China, and the impact on Chinese growth would be negative, the impact on the region will be negative, the impact on global growth will be negative,” she said.
Georgieva pointed to the US as the “most resilient” economic vehicle and said it may be able to swerve recession.
“We see the labour market remaining quite strong,” she explained.
However, she described this as a “mixed blessing” as “if the labour market is very strong, the Fed may have to keep interest rates tighter for longer to bring inflation down.”
In the autumn, the IMF slashed its global economic outlook for 2023.
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