Global Economy to Plunge Into Recession in 2023—IMF

By Adedapo Adesanya

The International Monetary Fund (IMF) has said the global economy is in for a tougher year as it projects that one-third of the globe will slide into recession.

Speaking on Monday, the Head of the global lender, Ms Kristalina Georgieva, explained that the year 2022 had seen various countries suffer the ripple effects of ongoing Russia- Ukraine conflict, the resurgence of the COVID-19 virus in China as well as stifling inflation indices not just on the African continent but amongst some of the biggest economies.

While explaining the IMF’s October global economic growth outlook for 2023, she insisted that the best of economies might likely not be spared from the far-reaching effects of the recession.

“We expect one-third of the world economy to be in recession,” she said on the CBS news programme Face the Nation.

“Even countries that are not in recession, it would feel like a recession for hundreds of millions of people,” Ms Georgieva added.

She also noted that the Chinese economy should expect slow growth as they continue to fight the pandemic that has affected production.

“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 said.

According to her, the US stands a better chance of escaping global contractions due to its resilient labour market.

The US economy is remarkably resilient… (and) may avoid recession. We see the labour market remaining quite strong,” she said.

Ms Georgieva, also speaking on the debt profile of countries, claimed there was the need for some level of “concern” as many of these nations had gone beyond the advised borrowing scheme.

“Once Russia invaded Ukraine, and that added impetus to inflation, money is not cheap anymore; the advice we give to the government is to focus on your budgets and make sure you have sufficient revenues to collect, and you spend very wisely,” she said.

“What we are seeing is the world is a more shock-prone world; the lessons we learned from the last couple of years are that no more are we operating with relative predictability of what the future will bring,” Ms Georgieva disclosed.

“What that means for governments is we need to change our mindsets towards more resilience and more precautionary actions,” she stated, adding that the outlook for emerging markets in developing economies was even direr due to interest rate hikes and a strong US Dollar.