For much of the global economy, 2023 is going to be a tough year as the main engines of global growth—the United States, Europe and China—all experience weakening activity, the head of the International Monetary Fund said on Sunday.
The new year is going to be"tougher than the year we leave behind," IMF Managing Director Kristalina Georgieva said."Why? Because the three main economies—the US, EU and China—are all slowing down simultaneously." REUTERS/ Remo Casilli/ File photo
"Why? Because the three big economies—the US, EU and China—are all slowing down simultaneously," she said. reflecting the continuing drag from the war in Ukraine as well as inflation pressures and the high interest rates engineered by central banks like the US Federal Reserve aimed at bringing those price pressures to heel.
Moreover, a "bushfire" of expected COVID-19 infections there in the months ahead are likely to further hit its economy this year and drag on both regional and global growth, said Georgieva, who traveled to China on IMF business late last month. In October's forecast, the IMF pegged Chinese gross domestic product growth last year at 3.2%—on par with the fund's global outlook for 2022. At that time, it also saw annual growth in China accelerating in 2023 to 4.4% while global activity slowed further.
But that fact on its own presents a risk because it may hamper the progress the Fed needs to make in bringing US inflation back to its targeted level from the highest levels in four decades touched last year. Inflation showed signs of having passed its peak as 2022 ended, but by the Fed's preferred measure, it remains nearly three times its 2% target.
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