Global recession: The year 2023 will be way tougher than the earlier as the main drivers of the world economy-- the US, China and Europe-- may experience severe turbulence amid the ongoing Russia-Ukraine war and the COVID-19 pandemic. According to International Monetary Fund (IMF) managing director, Kristalina Georgieva, nearly a third of the global economy will be in recession this year.
While speaking on the CBS Sunday morning news program Face the Nation, she underscored that the relentless war and the emergence of the new COVID wave in China have been affecting the economy. "We expect one-third of the world economy to be in recession. Even countries that are not in recession, it would feel like a recession for hundreds of millions of people," she said.
Notably, this was not the first time when the IMF Chief projected such a drastic scenario but in October last year, she had warned that the war and any potential wave of the lethal virus could drive the world into recession.
Tough days ahead for China
Further, Georgieva said China, being the world’s second-largest economy, will grow at or below the global growth rate. If China attains the projected growth rate, it would be the first time in 40 years that Beijing's growth rate falls below the normal trend. She claimed Chinese President Xi Jinping's decision to dismantle the ultra-strict zero-Covid policy was the main reason for the collapse.
“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 noted.
Georgieva also warned that the “fragmentation″ of the world economy into competing political blocs could cause inflation to linger. If geopolitical tensions cause companies to move their supply chains — out of China, for instance — production could become less efficient and more expensive. And central bank rate hikes couldn’t do much about it. “If we lose the benefits of a more-integrated global economy, we all would be poorer,″ she said.
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