IMF chief makes BIG STATEMENT on recession, says this about China, US

IMF managing director Kristalina Georgieva on Sunday (January 1) said that recession will hit a third of the world economy in 2023. The IMF chief noted that the global economy is staring at a “tougher” year in 2023 than 2022.

Georgieva said the US, EU and China are all slowing down. “We expect one-third of the world economy to be in recession,” Georgieva told US TV network CBS in an interview, adding that “half of the European Union will be in a recession” this year.

It may be recalled that in October 2022, the IMF slashed its 2023 outlook for the growth of the world economy.

The IMF boss said that the sudden spike in COVID-19 cases in China will affect the Chinese economy in the short term.

 “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.

According to Georgieva, for the first time in four decades, China would record an annual growth that would be less or equal to global growth. The IMF chief expressed fear that the slowdown in Chinese economy would affect the global economy. “That has never happened before,” she said.

Georgieva, however, said that the US may escape the worst of recession because it has a strong labour market.

The US “may avoid a recession” because its unemployment is so low, she said. “If that resilience . . . holds [in 2023], the US would help the world to get through a very difficult year,” she said. “The US economy is remarkably resilient.”

Meanwhile, talking to CBS, Bank of America’s chief economist Michael Gapen said the risk of a recession hitting the US economy was “high”, but any recession “may not be a deep and prolonged one”.