Embrace a tougher 2023 economy: IMF warns
International Monetary Fund Managing Director Kristalina Georieva speaks at a conference in Riyadh, Saudi Arabia, October 3, 2022. REUTERS/Ahmed Yosri
Kenya, Nairobi – The International Monetary Fund has warned that 2023 will be a tough year as activity in the US, Europe and China, the main drivers of global growth, are all weakening.
This is according to IMF boss Kristalina Georgieva, who was speaking to CBS Media.
Late last year, global lenders lowered their forecasts for global economic growth in 2023. This reflects the continued drag from the war in Ukraine, inflationary pressures and high interest rates designed by central banks such as the US Federal Reserve to bring those prices to fruition. pressure on the heel.
China has already scrapped its zero-coronavirus policy and embarked on a disorderly reopening of its economy, but Chinese consumers remain vigilant as coronavirus cases surge.
In his first official comment after the policy change, President Xi Jinping delivered a New Year’s greeting calling for greater efforts and unity as China enters a “new stage.”
“For the first time in 40 years, China’s growth rate in 2022 is likely to be below the global growth rate,” Georgieva said.
“I was in China last week, in a bubble in a city with zero COVID,” she said. “But once people start traveling, it doesn’t last long. The next few months are going to be tough for China, the impact on China’s growth will be negative, the impact on the region will be negative, the impact on the world will be negative. The impact will be negative, the growth rate will be negative,” she said.
The IMF pegged China’s gross domestic product (GDP) growth at 3.2% last year in its October forecast. This is the same as his 2022 global outlook for the IMF. At that time, China’s annual growth rate accelerated to 4.4% in 2023, and global activity slowed further. .
But her comments signaled that both China and global growth forecasts could be cut again later this month, when the IMF usually releases its latest forecasts at the World Economic Forum in Davos, Switzerland. suggesting.
On the US economic outlook, Georgieva said the US economy stands out and may avoid a full contraction that is likely to afflict a third of the global economy.
“The U.S. is the most resilient” and “could avoid a recession. The labor market remains very strong. This is a mixed blessing, as it may need to be continued.
Last year, in its most aggressive tightening since the early 1980s, the Fed raised its benchmark policy rate from near zero in March to 4.50% from its current 4.25%. By 2023, levels not seen since 2007.
Indeed, the US job market will be a central focus for Fed officials hoping to ease labor demand to ease upward pressure on prices.