International Monetary Fund (IMF) managing director Kristalina Georgieva warned that the global economy will face “a tough year, tougher than the year we leave behind.”
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“We expect one-third of the world economy to be in recession,” Kristalina Georgieva told CBS in an interview.
“Why? Because the three big economies — US, EU, China — are all slowing down simultaneously,"
Earlier, the IMF warned in October that more than a third of the global economy will contract adding that there is a 25% chance of global GDP growing by less than 2% in 2023. This is defined as a global recession.
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Examining the three biggest economies in the interview, Kristalina Georgieva painted a mixed picture of their ability to withstand the downturn.
While “the US may avoid recession,” the European Union has been “very severely hit by the war in Ukraine — half of the EU will be in recession next year,” she said.
{{/usCountry}}While “the US may avoid recession,” the European Union has been “very severely hit by the war in Ukraine — half of the EU will be in recession next year,” she said.
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At the same time China faces a “tough year”, she adding, saying, “That translates into negative trends globally — when we look at the emerging markets in developing economies, there, the picture is even direr."
Still, the outlook for US- world’s largest economy- may offer some respite, she said.
“If that resilience of the labor market in the US holds, the US would help the world to get through a very difficult year,” Kristalina Georgieva said.