The head of the International Monetary Fund (IMF) has warned that a third of the global economy will be in recession this year. In October 2022, the IMF cut its global economic growth outlook for 2023. Kristalina Georgieva said 2023 would be “tougher” than last year as the EU, US, and China see their economies slow down. This comes as the rising prices, the war in Ukraine, higher interest rates, and the spread of the mutating COVID-19 virus in China weigh on the global economy.
The IMF already warned in October 2022 that more than a third of the global economy will shrink and that there is a 25% chance of global GDP increasing by less than 2% in 2023, leading to a global recession. Since then, before the start of the new year, China has scrapped its zero-Covid policy and has reopened its economy, even as coronavirus infections have spread rampantly in the country. Ms Georgieva also warned that China, the world’s second-largest economy, would face a difficult start to 2023.
“We expect one-third of the world economy to be in recession,” Ms Georgieva said. “Even countries that are not in recession, it would feel like a recession for hundreds of millions of people,” she added.