The IMF warns of the “simultaneous slowdown” in the US, the European Union and China | Economy

The year begins with bad forecasts for the world economy. The managing director of the International Monetary Fund (IMF), Kristalina Georgieva, predicted this Sunday that 2023 will be a “tougher” year, since the main engines of world growth (the United States, Europe and China) are going to experience a weakening in your activity. “The three big economies, the United States, the European Union and China, are slowing down simultaneously,” Georgieva warned this Sunday, in an interview on the US television network CBS.

In October, the IMF already cut its world growth outlook for 2023. This forecast already reflected the consequences of the Russian invasion of Ukraine, as well as inflationary pressures and the abrupt rise in interest rates decreed by the Federal Reserve (Fed). and the European Central Bank (ECB). “Recession risks are increasing. We estimate that the countries that represent around a third of the world economy will experience at least two consecutive quarters of contraction this or next year”, said the managing director of the organization, in line with what was expressed then.

Since the fall, China has scrapped its strict Covid-19 policy and embarked on a reopening of its economy. Consumers, however, remain cautious as coronavirus cases rise. In his first public comments since the change in his policy, President Xi Jinping called in a New Year’s address on Saturday for greater effort and unity as China enters a “new phase.” “For the first time in 40 years, China’s growth in 2022 is likely to be equal to or less than global growth,” he said.

The head of the IMF has affirmed this Sunday that the increase in covid cases in the Asian country, which she visited last week, could further affect the economy and weigh down regional and world growth. “Over the next few months, it will be difficult for China and the impact on Chinese growth will be negative, the impact on the region will be negative, the impact on global growth will be negative,” she said.

The US economy, “more resilient”

The US economy, however, is “more resilient.” So much so that it can avoid the contraction: “The United States is more resilient: we see that the labor market remains quite strong.” On its own, however, it is a risk because it could lead the Fed to be more aggressive in its policy to bring inflation back to its target level from the highest in more than four decades. “This is a mixed blessing, because if the job market remains very strong, the Federal Reserve may have to keep interest rates tighter for longer to reduce inflation,” Georgieva slipped.

In both the US and Europe, inflation has recently shown signs of having surpassed its peak, but it is still far from the 2% target.

THE COUNTRY of the morning

Wake up with the analysis of the day by Berna González Harbor


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