2023 is going to be 'tougher' according to IMF as world's largest economies are expected to face a downfall.

 2023 is going to be tough according to IMF

             International Monetary Fund (IMF) has warned that the year 2023 is not going to be good for global economy as three largest economies of the world are expected to face a downfall this year. According to IMF chief, 2023 would be 'tougher' than 2022 because of numerous challenges. As we can see that the economies of the United States, China and European Union are slowing their growth at the moment, it is most likely that these effects would be seen throughout the year. If any of these three economies suffer, the whole world will feel the impact.

          IMF Managing Director Kristalina Georgieva has said that in 2023, one-third of world's economies is expected to decline. Talking to the CBS program "Face the Nation", she said, "This year would be tougher than the previous because the three big economies, the US, EU, and China, are all slowing down simultaneously." It is worth noting that IMF warned about this issue a few months ago (in October) too when it cut its Global Growth Forecast down from 2.9% to 2.7%, taking in consideration the rising interest rates, and the war in Ukraine.

Kristalina Georgieva

              Now lets discuss the challenges that world's largest economies are facing at the moment, and the impact on other countries.

China:

               The biggest challenge China is facing currently is an increase in COVID-19 cases. Due to this reason, for the first time in 40 years, the economy of China is likely to grow at or below the global growth rate. Before COVID, China used to deliver around 40% of global growth, but this is not happening anymore. "That has never happened before.", IMF chief said while talking about China, world's second-largest economy. She said that she expected China's economy to improve towards the end of the year 2023, but there are a lot of concerns on its long-term growth.

China is facing COVID again.(Courtesy:Aly Song/Reuters)

           China's economy plays a vital role in Asia, and has a large impact on other Asian countries. Kristalina Georgieva said, "A downfall in China's growth is actually quite stressful for other Asian economies. Whenever I talk to Asian leaders, they always start the discussion asking about China's economy." Thus, this year is going to be challenging for Asian countries.

European Union:

                European Union has been affected a lot by the on-going war in Ukraine. The invasion of Ukraine has impacted the mobility of people and goods in European Union. Fuel supplies have been disturbed, and fuel prices are rising in EU. Due to inflation, the European Central Bank is increasing the interest rates. This is putting pressure on businesses and indebted EU members such as Italy. Other challenges are border crossings and airspace restrictions. Considering this situation, Georgieva said, "Half of the European Union bloc is expected to be in recession this year."

United States:

               United States has also been affected by the COVID pandemic and Russia-Ukraine war recently. However, according to IMF chief, United States may be the least affected economy, and it could possibly avoid contraction this year. Talking about this, Georgieva said, "Labour markets in America have remained quite strong. If labour market is strong, the Fed may have to keep the interest rates tighter for a long time to bring the inflation down." This is the only hope for the global economy as the challenges are increasing day by day due to natural disasters, and the political instability at international level.

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