Many countries could suffer recession in 2023, says the IMF.

IMF Chief, Image: SaharaReporters.

The Managing Director of the International Monetary Fund, IMF, Kristalina Georgieva has said that most global economies will experience tougher times in 2023 as growth in the United States, European Union, and China slows down.    

During an appearance on a CBS program, “Face the Nation” on Sunday, Georgieva warned that 2023 will be a “tough year”, with one-third of the world’s economies expected to be in recession, Aljazeera reports.

“Why? Because the three big economies, [the] US, EU, China, are all slowing down simultaneously,” she said.

The remarks come after the IMF cuts its global growth forecast to 2.7 percent in October, down from the 2.9 percent forecast in July, amid headwinds including the war in Ukraine and sharply rising interest rates.

Georgieva said that following the surge in COVID-19 cases in China resulting from the relaxation of its "zero-COVID” policy, 

the country's economy which is the world’s second-largest is likely to grow at or below global growth for the first time in 40 years.

“That has never happened before. And looking into next year, for three, four, five, or six months the relaxation of COVID restrictions will mean bushfire COVID cases throughout China.

“I was in China last week, in a bubble in the city where there is ‘zero COVID’. But that is not going to last once the Chinese people start traveling,” Georgieva said.

Georgieva said although she expected China’s growth to improve towards the end of the year, there are still concerns about its longer-term trajectory.

“Before COVID, China would deliver 34, 35, 40 percent of global growth. It is not doing it anymore. It is quite stressful for … the Asian economies. 

"When I talk to Asian leaders, all of them start with this question, ‘What is going to happen with China? Is China going to return to a higher level of growth?”

Meanwhile, half of the EU is expected to go into recession this year because of the war in Ukraine, Georgieva said.

However, the IMF chief said that the US economy stands out for its resilience and could avoid recession this year.

“The US is most resilient. The US may avoid recession,” she said.

“We see the labor market remaining quite strong. This is, however, [a] mixed blessing because if the labor market is very strong, the Fed may have to keep interest rates tighter for longer to bring inflation down,”

Georgieva noted.

Economy.