Global Economy Faces Tougher Year In 2023, IMF's Georgieva Warns  

 

  • 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 and China - all experience weakening activity, the head of the International Monetary Fund, Kristalina Georgieva, said on Sunday, Jan. 1, 2023.
  • In October, the IMF cut its outlook for global economic growth in 2023, reflecting the continuing drag from the war in Ukraine, inflation pressures, and the high-interest rates engineered by central banks like the U.S. Federal Reserve to bring those price pressures to heel.
  • Georgieva said the U.S. 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.
  • Inflation showed signs of having passed its peak as 2022 ended, but by the Fed's preferred measure, it remains nearly three times its 2% target. Last year, in the most aggressive policy tightening since the early 1980s, the Fed lifted its benchmark policy rate from near zero in March to the current range of 4.25% to 4.50%, and Fed officials last month projected it will breach the 5% mark in 2023, a level not seen since 2007.
  • The U.S. job market will be a central focus for Fed officials who would like to see demand for labour slacken to help undercut price pressures. The first week of the new year brings a raft of key data on the employment front, including Friday's monthly nonfarm payrolls report, which is expected to show the U.S. economy minted another 200,000 jobs in December and the jobless rate remained at 3.7% - near the lowest since the 1960s.

(Source: Reuters)