A third of the global economy is likely to be hit by a recession this year. This was stated by top woman Kristalina Georgieva from the International Monetary Fund (IMF) in an interview with the American channel CBS. According to her, 2023 will likely be “heavier than the year we leave behind.” “Why? Because the three largest economies, the United States, the European Union and China, are all slowing down at the same time.”
In October, the IMF already lowered its forecast for global economic growth in 2023. This is due to the sharp rise in inflation following the war in Ukraine, combined with the reaction of central banks. They rapidly raise their interest rates to limit the rise in the price level, but by doing so they also slow down the development of the economy.
A lot has happened since the IMF’s last big forecast. For example, China has abandoned its zero-covid policy and embarked on a chaotic reopening of its economy. The number of corona infections is now rising rapidly again and this will likely have an impact on growth in the near future. Georgieva has yet to provide concrete figures to CBS. The IMF is expected to release an update to its global growth forecast later this month.
LOOK. The number of corona infections in China is now rising rapidly again
In December, the IMF reported after a review that Belgium needs to make a saving effort of 0.8% of gross domestic product (GDP) next year. This equates to savings of around €4.6 billion. During the successive corona and energy crises, governments dug deep into their pockets to support households and businesses. In addition, defense spending and an aging population have also increased, among other things.
All of which means that the budget deficit will increase in 2023. IMF head of mission Mark Horton points out that Belgium’s deficit is “well above pre-pandemic levels” and well above a level that would allow debt to stabilize. The IMF also supports the automatic wage indexation reform.
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