MercoPress. South Atlantic News Agency

This year will be tougher than 2022, IMF's Georgieva forecasts

“This recession will be devastating for highly indebted countries,” Georgieva explained

With the world's three major economies -the United States, the European Union, and China- slowing down simultaneously, 2023 will be “tougher than the year we left behind,” International Monetary Fund (IMF)'s Managing Director Kristalina Georgieva said during an interview with CBS. She also heralded in Washington that “a third of the world economy will be affected by a recession.”

In an interview with CBS, Georgieva explained that “China, for the first time in 40 years, will grow at or below the growth of the world economy, as a consequence of its health policy against Covid-19.”

Hence, every economy relying on sales to China would “grow less than the global average,” Georgieva stressed. “That has never happened before and means it could drag down global economic activity rather than boost it,” she added.

“The United States, the European Union, and China are slowing down simultaneously and we expect one-third of the world economy to be in recession,” she went on.

“Over the next few months, it would be difficult for China because of severe health restrictions and the impact on Chinese growth would be negative, the impact on the region would be negative and the impact on global growth would be negative,” Georgieva also pointed out.

In her view, “half of the European Union will be in recession,” but “the United States is more resilient, it could avoid recession.”

“The U.S. economy is remarkably resilient and is likely to escape the worst of the recession, thanks in part to its strong labor market,” Georgieva insisted.

The interest rate hike in the United States and the appreciation of the dollar “will affect” exports of developing and emerging countries, Georgieva also explained while stressing that “this recession will be devastating for highly indebted countries.”

The IMF cut its growth projections last October when it updated its World Economic Outlook for 2023. The IMF is now expected to cut its forecasts again this month during the World Economic Forum to be held at the end of the month in Davos, Switzerland.

“I was in China last week, in a bubble in a city where there are no COVIDs,” she said. “But that's not going to last once people start traveling.”

“For the next few months, it will be tough for China and the impact on Chinese growth will be negative, the impact on the region will be negative, the impact on global growth will be negative,” she said.

Georgieva also expects half of the European Union countries, whose economy is “severely impacted” by the war in Ukraine, to enter recession by 2023. She also explained efforts were being made so that the Ukrainian economy does not collapse.