According to the International Monetary Fund (IMF), the global economy will have a tougher year this year, with one-third of the world expected to enter a recession.
Ms Kristalina Georgieva, the global lender’s Head, explained on Monday that the year 2022 had seen various countries suffer the ripple effects of the ongoing Russia-Ukraine conflict, the resurgence of the COVID-19 virus in China, and stifling inflation indices not just on the African continent but among some of the world’s largest economies.
She insisted while explaining the IMF’s October global economic growth forecast for 2023 that even the best-performing economies might not be immune to the recession’s far-reaching effects.
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.
Because of its resilient labour market, she believes the United States has a better chance of avoiding global contractions.
The United States’ economy is remarkably resilient… (and) may avoid recession. “We believe the labour market will remain quite strong,” she said.
Ms Georgieva, speaking on the debt profile of countries, stated that there was a need for some “concern” because many of these nations had gone beyond the recommended 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.