2023 may bring developments truly unprecedented, IMF warns

IMF Managing Director Kristalina Georgieva said that a third of the world economy will be in recession this year, adding that the world faces a tougher year in 2023 than in the previous 12 months. The US, the EU and China are all slowing down at the same time, the IMF chief said.

We expect a third of the world economy to be in recession,

Georgieva said in an interview with US TV channel CBS on Sunday, adding that half of the EU will also be affected.

In October, the IMF cut its outlook for world economic growth in 2023, citing the continuing impact of the Russia-Ukraine war, inflationary pressures, and interest rate hikes by major central banks.

The situation in China is not good either, due to the rapid spread of the coronavirus, and the country is facing another economic blow in the short term, she added.

According to Georgieva,

for the first time in 40 years, China's annual growth is likely to be at or below global growth, meaning that it could pull back rather than boost world economic activity.

This has never happened before,

she stressed.

The paper notes that Georgieva's words likely foreshadow that the IMF will soon lower its economic forecasts for 2023 again, which it usually publishes at the World Economic Forum in Davos at the end of the month.

But there are good tidings as well: according to Georgieva, the US is likely to avoid a recession, thanks in part to its strong labour market.

Cover photo: Getty Images