IMF chief warns that a third of the world is headed for recession

A third of the world will fall into recession this year, the head of the International Monetary Fund (IMF) has warned.

IMF Director Kristalina Georgieva said that the simultaneous economic slowdown in China, the European Union and the United States will affect the rest of the world.

“We expect a third of the global economy to be in recession,” she said. She added that countries that escaped economic suffering will not be saved: “For hundreds of millions of people, it will be like a recession.”

The slowdown in China will have global repercussions, she said. The world’s second-largest economy has been hit over the past year by a brutal Covid zero policy that has thrown China out of sync with the rest of the world, disrupted supply chains and disrupted the flow of trade and investment around the world.

While the US may avoid a recession, the situation looks bleaker in Europe, which has been hit hard by the war in Ukraine. “Half of the European Union will be in recession,” Georgieva said.

“For the first time in 40 years, China’s growth in 2022 is expected to be at or below global growth. Before Covid, China was responsible for 34, 35, 40 percent of global growth. It doesn’t work anymore.”

The head of the IMF added that the fight against the rapid spread of Covid-19 is another blow to Beijing.

Georgieva, who traveled to China last month on behalf of the IMF, said a “wildfire” of expected Covid cases in the coming months is likely to hit the economy even harder this year, stalling both regional and global growth.

“The coming months will be difficult for China, and the impact on China’s growth will be negative, the impact on the region will be negative, the impact on global growth will be negative,” she said.

In its October forecast, the IMF estimated China’s gross domestic product growth at 3.2 percent last year, similar to the fund’s 2022 global forecast. slow down.

However, their comments suggest that a further reduction in growth forecasts for both China and the world is expected later this month, when the IMF will present largely updated forecasts at the World Economic Forum in Davos, Switzerland.

It also meant that 2023 would be a particularly “busy” time for China’s closest neighbors in Asia.

The IMF currently projects global growth of 2.7% this year, up from 3.2% in 2022. If the US economy remains strong, America will “help the world get through a very difficult year,” Georgieva said.