Europe will see weakening activity amid a global growth slowdown, the head of the International Monetary Fund has warned.
The following 12 months will be more challenging than the year prior, Kristalina Georgieva told CBS, with China, the US and Europe simultaneously facing economic slowdowns.
“We expect one-third of the world economy to be in recession. Even countries that are not in recession, it would feel like recession for hundreds of millions of people,” Georgieva said.
She added that half of the EU will be in recession this year while still contending with the need for energy independence from Russia.
In October, the IMF warned that Europe must address the combination of high inflation and stuttering growth amid broader risks of a severe global economic downturn. It cut its outlook for global growth
A month later, the Organisation for Economic Cooperation and Development warned that Europe would be hit the hardest by the worst energy crisis since the 1970s and the subsequent economic slowdown.
Dependency on Russian energy will be a factor in how nations’ economies fare over the coming year. France’s economy, which is significantly less dependent on Russian gas and oil than other European nations, is expected to grow by 0.6% in 2023.
Germany, meanwhile, faces a slump of 0.3% owing to its energy-dependant industrial economic bedrock.
Globally, Georgieva warned that China and debt-laden emerging market economies would also face a difficult start to 2023.
“For the next couple of months, it would be tough for China, and the impact on Chinese growth would be negative, the impact on the region will be negative, the impact on global growth will be negative,” she said.
Debt resolution for nations including Ethiopia, Lebanon and Sri Lanka is high on the IMF’s agenda, Georgieva added.
Her comments come ahead of the World Economic Forum in Davos, Switzerland, where the IMF usually unveils updated forecasts.
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