The head of the International Monetary Fund said on Sunday that for the global economy, 2023 is going to be a difficult year as the main engines of global growth – the United States, Europe and China – all experience weaker activity.
IMF Managing Director Kristalina Georgieva said on the CBS Sunday morning news program “Face the Nation” that “the new year” is going to be tougher than the year we left behind.
“Why? Because the three big economies — the US, the European Union and China — are slowing down all together,” she said.
In October, the IMF cut its outlook for global economic growth in 2023, reflecting the continued drag from the war. ukraine Also, inflationary pressures and higher interest rates designed by central banks such as the US Federal Reserve aim to reduce those price pressures.
Since then, China has scrapped its zero-COVID policy and begun a chaotic reopening of its economy, though consumers there remain wary as coronavirus surge in cases. In his first public remarks since the policy change, President Xi Jinping called for greater effort and unity in a New Year’s address on Saturday as China enters a “new phase”.
“For the first time in 40 years, China’s growth in 2022 is expected to equal or be less than global growth,” Georgieva said.
In addition, a “bushfire” of COVID infections expected in the coming months is likely to further impact its economy this year and drag down both regional and global growth, said Georgieva, who at the end of last month called on IMF trade But had traveled to China.
“I was in China last week, in a bubble in a city that has zero COVID,” she said.
“For the next few months, it will be tough for China, and the impact on Chinese growth will be negative, the impact on the region will be negative, the impact on global growth will be negative,” he said.
In its October forecast, the IMF pegged Chinese GDP growth last year at 3.2% – the same as the Fund’s global outlook for 2022. At the time, it forecast annual growth of 4.4% in China through 2023, while global activity slowed further. ,
However, his comments suggest a further cut in both China and the global growth outlook could kick off later this month when the IMF usually unveils updated forecasts during the season. world Economic Forum in Davos, Switzerland.
US economy ‘most resilient’
Meanwhile, Georgieva said, the US economy is standing apart and may avoid the outright contraction that is likely to affect a third of the world’s economies.
“America is the most resilient,” she said, and it “can survive a recession. We see the labor market as quite strong.”
But that fact in itself presents a risk because it could hinder the progress the Fed needs to bring US inflation back to its target level from the highest level in four decades it touched last year. Inflation has shown signs of passing its peak as 2022 ends, but by the Fed’s preferred measure, it remains nearly three times its 2% target.
“This … is a mixed blessing because if the labor market is too strong, the Fed may have to keep interest rates tighter longer to bring down inflation,” Georgieva said.
Last year, in the most aggressive policy move since the early 1980s, the Fed raised its benchmark policy rate in March from near zero to 4.25% to 4.50%, and Fed officials estimated last month that it would raise that rate by another 5 percentage points. will violate In 2023, a level not seen since 2007.
Indeed, the US job market will be a central focus for Fed officials, who want to see labor demand ease to help ease price pressures. The first week of the new year brought key data on the jobs front, including Friday’s monthly non-farm payrolls report, which is expected to show the US economy added an estimated 200,000 more jobs in December and the unemployment rate to 3.7%. remained at – the lowest since the late 1960s.
read all Breaking News here
(This story has not been edited by News18 staff and is published from a syndicated news agency feed)