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In an interview with CBS that appeared on Sunday, Kristalina Georgieva, the managing director of the International Monetary Fund (IMF), provided the IMF's expectations for the United States, the EU, China, and the global economy. The managing director's came after also considering the crypto ban in the EU and the bear market of 2022.
IMF Issues Warning for 2023
Georgieva said that this year will be harder than the previous one leaving behind the majority of the international economy. The reason for this is the simultaneous slowdown of the three major economies—the United States, the European Union, and China. The IMF head said that a robust job market may need the Fed to maintain higher interest rates for longer to reduce inflation.
Increase in Borrowing Rates and Dollar
According to Georgieva, the war in Ukraine significantly impacted the EU and next year, the European Union as a whole will experience a downturn. This year, China will slow down much further and have a difficult year in 2023, she continued, which would result in unfavorable trends over the world. The situation is significantly worse when the burgeoning markets are in underdeveloped nations. In addition to everything else, businesses have to deal with rising borrowing rates and a strengthening dollar, which would be a disaster for those economies that have significant levels of it.
Shock-Prone Environment
Georgieva continued by saying that the world has evolved drastically and is a more shock-prone environment. These shocks, according to her explanation, include the Covid issue, the Russia-Ukraine war, and the rising cost of living. She concluded by saying her advice is to not anticipate a return to the predictability of the Covid era. They are awaiting more ambiguity and crises that intersect.