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 all experience weakening activity, the head of the International Monetary Fund said. The New Year is going to be “tougher than the year we leave behind,” IMF Managing Director Kristalina Georgieva said on the CBS. “Why? Because the three big economies — the US, EU and China — are all slowing down simultaneously,” she said. In October, the IMF cut its outlook for global economic growth in 2023, 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 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. Meanwhile, Georgieva said, the US economy is standing apart and may avoid the outright contraction that is likely to afflict as much as a third of the world’s economies. The “US is most resilient,” she said, and it “may avoid recession. We see the labour market remaining quite strong.” 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 2pc target.

Credit: Independent News Pakistan-INP