International Monetary Fund (IMF) head Kristalina Georgieva warned one-third of the global economy will be in recession this year.
Speaking on the CBS show Face the Nation, Georgieva said this year will be “tougher” than last and that the United States, European Union, and China will see economic slowdowns.
Her comments follow the IMF’s decision last October to cut its global economic growth projection for 2023, a response to, among other things, Russia’s military operation in Ukraine and higher interest rates around the world.
Georgieva also offered that even in countries that are not in a recession, “it would feel like recession for hundreds of millions of people.”
Georgieva’s gloomy forecast paid particular attention to China. “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.
China recently reversed some of its policies toward Covid-19, effectively ending its zero-Covid approach, and began reopening its economy. But Covid-19 cases are spreading. Chinese President Xi Jinping has called for unity as the country enters a “new phase.”
China, Georgieva said, will likely grow at or below global growth for the first time in 40 years. What she described as a “bushfire” of Covid-19 infections should be expected to hurt the country’s economy—and also impact regional and global growth.
Georgieva called the US economy the “most resilient” and said the United States “may avoid recession.” But she also called a strong labor market a “mixed blessing,” as it may lead the US Federal Reserve to keep interest rates tight so as to combat high inflation, which could have negative economic consequences of its own.
