Expectations of global economic growth of less than 3% in 2023

The Director-General of the International Monetary Fund, Kristalina Georgieva, expected the global economy to grow by less than 3% in 2023, with half of this growth coming from India and China, in a speech before the spring meetings that will start next week.

Georgieva said that global growth in 2022 almost halved from 6.1% to 3.4%.

“The slowdown continued this year. Despite the surprising resilience of labor markets and levels of consumer spending in most advanced economies, and the improvement resulting from the reopening of the Chinese economy, we expect the global economy to grow by less than 3% in 2023,” she added.

“The global economy is expected to grow by about 3% over the next half decade, with interest rates rising, which is the lowest growth rate in the medium term since 1990, and less than the five-year average of 3.8% over the past two decades,” she said.

“As you will read in the International Monetary Fund’s World Economic Outlook next week, growth remains weak compared to historical trends – both in the near and medium term, and there are wide differences between country groups,” Georgieva said.

Emerging economies are showing some momentum – especially in Asia which is a bright spot, where half of global growth in 2023 is expected to be attributed to India and China.

As for other economies, the upward experience will be more difficult, as economic activity slows down in the United States and the Eurozone due to the impact of higher interest rates on demand levels. It is expected that growth rates will decline this year in about 90% of the advanced economies.

In low-income countries, the cost of borrowing rises as demand for their exports declines. Per capita income growth in these countries remains below the level of emerging economies, which is a severe blow to low-income countries that makes it even harder to catch up.

Poverty and hunger could worsen, a dangerous trend created by the Covid crisis.