In an interview aired on 1st January, the International Monetary Fund Managing Director stated, “we expect one-third of the global economy to be in recession.”
Kristalina Georgieva told this while speaking in an interview on CBS’s Face The Nation. She claimed that we are facing a tough year in terms of the global economy and this year will be tougher than the previous year. The reason for this will be the slowing down of the 3 largest world economies, the U.S., the EU, and China.
She also mentioned that the U.S. can avoid recession but the EU has already slowed down. The nations have been drastically affected by the war breakout between Ukraine and Russia. “Half of the EU will be in recession next year,” she added. Whereas China is having a tough year.
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The emerging markets will be severely impacted by the slowing down of big economies, Georgieva added. The slowdown becomes a trend globally, thus, taking down the entire world market.
China’s Pandemic Crisis
China reversed its Covid Zero policy in the month December, following the massive number of Covid positive cases. People were forced to stay at home and the businesses came to a standstill. The economic activity in the country has been slowest since 2020 when the pandemic first hit.
Data Warning Of Recession
A worldwide recession, as defined by the IMF, will affect more than a third of the world’s economies, and there is a 25% possibility that 2023 will see global GDP increase by less than 2%.
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Georgieva examined the three largest economies and presented a conflicting picture of their resilience to the crisis on CBS.
The manufacturing purchasing manager index figures released on Monday indicated low values in Europe, Turkey, and South Korea. Similar gloomy statistics are expected to be revealed for Malaysia, Taiwan, Vietnam, the UK, Canada, and the US in data to be released this Tuesday.
However, the outlook for the biggest economy in the world might provide some solace.
The crypto market will be facing the consequences of the slowing of the global economy. The recession will force investors to look out for other options or withdraw money. However, investors may look to Bitcoin investment as a hedge against the global recession.
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