par Dan Burns
(Archyde.com) – The year 2023 will be difficult for much of the global economy as the main engines of international growth – the United States, Europe and China – all experience a slowdown, the director said on Sunday. general of the International Monetary Fund (IMF).
The new year will be “more challenging than the year we leave behind,” Kristalina Georgieva said on CBS’ “Face the Nation” show, which airs Sunday morning.
“Why? Because the three major economies – the United States, the European Union and China – are all slowing down simultaneously,” she said.
The IMF lowered its 2023 global growth forecast in October to take into account the tensions linked to the war in Ukraine, inflation and the rise in interest rates, stressing that the situation could deteriorate significantly.
China has since abandoned its “zero COVID” policy and embarked on reopening its economy, though Chinese consumers remain wary of a surge in coronavirus cases.
President Xi Jinping on Saturday called in a New Year speech for more effort and unity as China enters a “new phase”.
According to Kristalina Georgieva, who visited China on behalf of the IMF at the end of December, “for the first time in 40 years, China’s growth in 2022 is likely to be equal to or lower than global growth”.
Meanwhile, the epidemic outbreak expected in the coming months is likely to further affect the Chinese economy this year and dampen regional and global growth, she added.
“I was in China last week, in a bubble in a city where there (was) no COVID,” she said. “But that’s not going to last once people start traveling.”
The next two months will be difficult for China and the impact on Chinese growth, on the region and on global growth will be negative, estimates Kristalina Georgieva.
RESILIENCE OF THE AMERICAN ECONOMY
The American economy, for its part, stands out and could avoid the contraction which risks affecting up to a third of the world’s economies, estimates the managing director of the IMF.
“The United States is the most resilient,” she said, and “it could avoid recession. We think the job market will remain quite strong.”
This fact, however, presents a risk as it may impede the progress the US Federal Reserve (Fed) needs to make to bring US inflation back to its target level of 2%.
“It’s … a mixed blessing because if the labor market is very strong, the Fed may have to keep interest rates tighter for longer to bring inflation down,” Kristalina Georgieva said. .
The Fed raised its key rate in December by half a point to 4.50% and announced new economic projections that will involve at least additional rate hikes of 75 basis points in 2023.
The US job market will be a focus for Fed officials, who would like to see labor demand ease to ease price pressures.
The first week of the new year will be marked by a series of key data on the jobs front, including the monthly non-farm payrolls report on Friday. Analysts anticipate the creation of 200,000 additional jobs for December and an unemployment rate stable at 3.7%, the lowest since the 1960s.
(Reporting by Dan Burns; Version française Kate Entringer)