ALBAWABA — Kristalina Georgieva, the head of the International Monetary Fund, issued a dire warning over the world's economic outlook, warning that this year is going to be even tougher than 2022.
The warning comes amid a worsening economic crisis even in developed nations. As the global economy slows down the U.S., E.U. and Chinese economies stutter, the Ukraine conflict rolls on, prices and interest rates soar and Covid-19 rise, adding more painful misery to an already gloomy outlook.
A third of the world will be hit by recession in 2023, including half of the European Union.
The fallout from spiraling inflation triggered by the Covid-19 pandemic and compounded by the Ukraine conflict will persist for longer in the U.K. than in other G7 nations and all signs indicate the country's recovery will be one of the weakest, the IMF suggests.
In October, the IMF slashed its outlook for global economic growth in 2023, blaming the gloomy outlook on the ongoing conflict in Ukraine and tougher monetary policies.
According to Georgieva, China will face a very difficult start to the year since it is likely to grow at or below the global growth rate for the first time in 40 years, while the US economy may avoid a recession but warned that a strong labor market in America may lead the US Federal Reserve to keep interest rates tight so as to combat high inflation, which could have negative economic consequences of its own.
The UK based Center for Economics and Business Research has also projected a global slide into recession next year as a number of economies will contract due to surging borrowing costs introduced to combat inflation. The Cebr report is more pessimistic than the IMF forecast.
Central bankers will stick to their guns in 2023 despite the economic costs of the consequences of bringing inflation down to more comfortable levels is a poor growth outlook for a number of years to come, according to Kay Daniel Neufeld of Cebr.
