The International Monetary Fund (IMF) has warned that a third of the world economy will face a recession this year.
IMF Managing Director Kristalina Georgieva, who revealed this in an interview with CBS News, an American television and radio network, noted that economic activities in the United States, the European Union, and China are slowing down simultaneously.
Georgieva said: “We expect a third of the world economy to be in recession. Half of the European Union will be in recession this year.
Georgieva further explained that the rapid spread of Covid-19 in China, especially now that the government has abandoned its harsh containment policy, means that the country faces a new economic blow in the near term.
He said the coming months will be “difficult for China” due to the spread of the deadly virus.
The IMF chief’s projection is in line with that of Goldman Sachs, a multinational investment bank, which stated that global economic growth will slow to 1.8 percent in 2023.
The IMF, in October, cut its outlook for global economic growth to 2023, citing the continued drag from the war in Ukraine, as well as inflationary pressures and interest rate hikes by major central banks.
“Over the next few months, it would be difficult for China and the impact on Chinese growth would be negative, the impact on the region would be negative, the impact on global growth would be negative,” Georgieva said.
“For the first time in 40 years, China’s annual growth is likely to be at or below global growth, meaning it could drag down global economic activity rather than boost it. That has never happened before.”