The International Monetary Fund (IMF) has warned that one-third of the world’s economy will drift into recession in the 2023.
IMF’s boss Kristalina Georgieva who made the projection while explaining the IMF’s October global economic growth outlook for 2023 said that the best of economies might likely not be spared from the far-reaching effects of the recession.
She said, “We expect one-third of the world economy to be in recession, she said on the CBS news programme Face the Nation.
“Even countries that are not in recession, it would feel like a recession for hundreds of millions of people.”
According to the 59-year-old economist, the Chinese economy should also expect slow growth as they continue to fight the pandemic that has affected production.
“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.
However, Georgieva noted that the US stands a better chance of escaping global contractions due to its resilient labour market.
“The US economy is remarkably resilient… (and) may avoid recession. We see the labour market remaining quite strong,” she said.
Also speaking on the debt profile of countries, Georgieva claimed there was the need for some level of “concern” as many of these nations had gone beyond the advised borrowing scheme.
“Once Russia invaded Ukraine and that added impetus to inflation, money is not cheap anymore, the advice we give to the government is to focus on your budgets and make sure you have sufficient revenues to collect and you spend very wisely,” she said.
“What we are seeing is the world is a more shock-prone world the lessons we learned from the last couple of years are that no more are we operating with relative predictability of what the future will bring.”
“What that means for governments is we need to change our mindsets towards more resilience and more precautionary actions.”
Similarly, the IMF boss said, the outlook for emerging markets in developing economies was even direr due to interest rate hikes and a strong US dollar.