International Monetary Fund Managing Director Kristalina Georgieva warned that the global economy faces \u201ca tough year, tougher than the year we leave behind.\u201d<\/p>\n
\u201cWe expect one-third of the world economy to be in recession,\u201d Georgieva told CBS\u2019s \u2018Face the Nation\u2019 in an interview aired on 1 January. \u201cWhy? Because the three big economies \u2014 US, EU, China \u2014 are all slowing down simultaneously.\u201d<\/p>\n
The IMF already warned in October that more than a third of the global economy will contract and that there is a 25% chance of global GDP growing by less than 2% in 2023, which it defines as a global recession.<\/p>\n
Examining the three biggest economies on CBS, Georgieva painted a mixed picture of their ability to withstand the downturn.<\/p>\n
While \u201cthe US may avoid recession,\u201d the European Union has been \u201cvery severely hit by the war in Ukraine \u2014 half of the EU will be in recession next year,\u201d she said. At the same time, China faces a \u201ctough year.\u201d<\/p>\n
\u2018Negative Trends\u2019<\/strong><\/p>\n Data published on Saturday showed that China\u2019s abrupt reversal of its Covid Zero policy pushed economic activity in December to the slowest pace since February 2020 as the virus swept through major cities and prompted people to stay home and businesses to shut.<\/p>\n The slowdown in the biggest economies \u201ctranslates into negative trends globally \u2014 when we look at the emerging markets in developing economies, there, the picture is even direr,\u201d Georgieva said.<\/p>\n Purchasing manager index numbers for manufacturing published on Monday showed negative readings across Europe, Turkey and in South Korea. Data published Tuesday are set to reveal similarly dire numbers for Malaysia, Taiwan, Vietnam, the UK, Canada and the US.<\/p>\n Still, the outlook for the world\u2019s largest economy may offer respite.<\/p>\n \u201cIf that resilience of the labour market in the US holds, the US would help the world to get through a very difficult year,\u201d Georgieva said.<\/p>\n
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