The global economy will slow down more than expected in 2023, a year in which much of the world will face recession or end up falling into it, the IMF said.
“(…) The worst is yet to come and for many people 2023 will feel like a recession,” said the International Monetary Fund (IMF), adding that if China stops, the world will too.
And in line with the Organization for Economic Cooperation and Development (OECD), which indicated that Chile is the member country with the strongest sign of economic slowdownneeded a bad projection.
Specifically, the IMF maintained that Chile’s GDP will be 2% this year, but that the country will not grow next year: the contraction would be 1%.
The global economy will slow down more than expected in 2023, a year in which a large part of the world will face recession or end up falling into itaccording to the IMF, which has lowered its growth forecast for next year by two tenths, to 2.7%.
In its global economic outlook report published this Tuesday, the IMF maintains its global growth forecast for 2022 at 3.2%, and warns that the risks that have already slowed down world economic developments they will persist and can make it worse.
According to the Fund, at least a third of world economies will enter a technical recession next yearthat is, they will have at least two consecutive quarters of contraction of their gross domestic product (GDP).
And calculate that there is a 25% chance that the situation will get worse and global growth next year will not even reach 2%, a situation that, with the exception of the first year of the pandemic, has not occurred since 2001.
All of this at a time marked by a very high inflation worldwide that can bring major problems if it is not stopped in time. Hence, the Fund encourages central banks to continue to tighten their monetary policy, even if this leads to an inevitable economic slowdown.
“The worst is yet to come”
“In short, the worst is yet to come, and for many people 2023 will feel like a recession”comes to say the director of research of the IMF, Pierre Olivier Gourinchas, in the introduction of this report marked by its unflattering forecasts.
The Russian invasion of Ukraine, which continues to “powerfully destabilize” the world economy and has led Europe into a “severe energy crisis”as well as the spiral of inflation throughout the world and the slowdown in the Chinese economy are, for the Fund, the factors that are marking the evolution of the world economy and will continue to do so in the near future.
For advanced economies, the Fund worsens forecasts for this year in the United States (1.6% growth compared to the 2.3% forecast in July), but maintains those of 2023 (1%), and does the opposite in the case of the main euro economies, which will be especially affected this year coming.
The euro zone will close this year better than expected -with growth of 3.1%, half a point more than in the previous forecast- thanks to various factors, including the maintenance of recovery funds, a less restrictive monetary policy and the push of two great economies, Spain and Italy, with its good data in the tourism sector.
But the IMF emphasizes the “significant” differences between some countries and others and the evolution that awaits them, and predicts a much greater curb for the countries most dependent on Russian gas. That is why in 2023 the euro zone will only advance 0.5%, seven tenths less than what the Fund calculated before.
If China stops, so does the world
The Asian giant will grow 3.2% this year and 4.4% next year, according to the IMF, one and two tenths less, respectively, than the previous report calculated.
Its zero covid policy and its continuous closures have taken their toll on its economy as a wholeto which is added that key sectors such as real estate have “rapidly weakened”.
China’s brake is being one of the factors that most affects the world economic course, especially due to the serious problems it is causing in supply chains. Something that, emphasizes the fund, will continue to “weigh heavily on global trade and activity.”