Crisis in the global economy in 2023-IMF
2023.01.01 12:53
Crisis in the global economy in 2023-IMF
Budrigannews.com – The head of the International Monetary Fund stated on Sunday that the main engines of global growth—the United States, Europe, and China—will all experience weakening activity in 2023, which will be difficult for a significant portion of the global economy.
Kristalina Georgieva, the managing director of the International Monetary Fund, stated on the CBS Sunday morning news program “Face the Nation” that the new year will be “tougher than the year we leave behind.”
“Why? “Because the three major economies, China, the EU, and the United States, are all slowing down at the same time,” she stated.
The IMF reduced its outlook for global economic growth in 2023 in October due to inflationary pressures and the high interest rates imposed by central banks like the U.S. Federal Reserve in an effort to alleviate these price pressures.
Despite China’s erratic reopening of its economy and abandonment of its zero-COVID policy, consumers there continue to be wary as coronavirus cases rise. In his first public remarks since the policy change, President Xi Jinping called for more cooperation and unity in China’s “new phase” in a New Year’s address on Saturday.
Georgieva stated, “China’s growth in 2022 is likely to be at or below global growth for the first time in 40 years.”
Georgieva, who was in China for business with the IMF late last month, said that a “bushfire” of anticipated COVID infections there in the coming months is likely to further hurt its economy this year and impede growth in both the region and the world.
She stated, “I was in China last week, in a bubble in a city with zero COVID.” But once people start traveling, that won’t last.”
She stated, “It would be tough for China for the next couple of months, and the impact on Chinese growth, the impact on the region, and the impact on global growth will be negative.”
The IMF predicted Chinese GDP growth of 3.2 percent in October, which was comparable to its global outlook for 2022. It also predicted that China’s annual growth would accelerate to 4.4 percent in 2023, while global activity would further slow.
Her remarks, on the other hand, suggest that the IMF’s updated forecasts for China and global growth could be cut again later this month at the World Economic Forum in Davos, Switzerland.
In the meantime, Georgieva stated, the United States economy is distinct and may avoid the outright contraction that is likely to affect up to a third of global economies.
She stated that the “U.S. is most resilient” and “may avoid recession.” We see the work market remaining areas of strength for very.”
However, this fact on its own poses a risk because it may impede the Fed’s efforts to bring inflation in the United States down to its target level from the highest levels in four decades reached last year. Expansion gave indications of having passed its top as 2022 finished, however by the Federal Reserve’s favored measure, it remains almost multiple times its 2% objective.
“This is … a blended gift since, in such a case that the work market is areas of strength for exceptionally, Took care of may need to keep loan costs more tight for longer to cut expansion down,” Georgieva said.
The Federal Reserve raised its benchmark policy rate from close to zero in March last year to the current range of 4.25 percent to 4.5 percent in the most aggressive policy tightening since the early 1980s. Fed officials predicted last month that it will surpass the 5% mark in 2023, a level not seen since 2007.
Indeed, Fed officials will focus primarily on the U.S. job market, hoping to alleviate price pressures by reducing labor demand. The first week of the new year brings a slew of important employment data, including Friday’s monthly nonfarm payrolls report, which is expected to show that the U.S. economy created another 200,000 jobs in December and that the unemployment rate remained close to the lowest level since the 1960s at 3.7 percent.
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