Some alarming statements were delivered on January 1st on the CBS television show “Face the Nation” by Kristalina Georgieva, the IMF’s head. Georgieva examined the three largest economies – US, China, and EU, and drew a contrasting picture of their resilience to a possible recession.
Georgieva stated the European Union has been badly affected by the war in Ukraine and half of the EU will be in recession next year. She also added that the United States “may avoid recession” and China is now experiencing a “difficult year.” Georgieva said:
“Global growth is forecast to slow from 6% in 2021 to 3.2% in 2022 and 2.7% in 2023. This is the weakest growth profile since 2001 except for the global financial crisis and the acute phase of the Covid pandemic.”
A worldwide recession, as defined by the IMF, will affect more than a third of the world’s economies. IMF thinks there is a 25% possibility that 2023 will see global GDP increase by less than 2%.
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The current crisis in Ukraine has lasted for more than ten months and is showing no signs of ending. Also there is a spike in coronavirus infections in China due to the Omicron strain, spiralling inflation, and increased interest rates.
After a surge of anti-government protests, China abandoned its zero-Covid policy and liberalized its economy. Georgieva added:
“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,”