A third of the global economy is likely to be hit by a recession this year. That said top woman Kristalina Georgieva of the International Monetary Fund (IMF) in an interview with the American channel CBS. According to her, 2023 will probably be “heavier than the year we leave behind”. “Why? Because the three major economies – the United States, the European Union and China – are all slowing down at the same time.”
In October, the IMF already lowered its forecasts for global economic growth in 2023. This was due to the sharp rise in inflation as a result of the war in Ukraine, combined with the reaction of central banks. They are rapidly raising their interest rates in order to limit the increase in the price level, but in doing so they are also slowing down the development of the economy.
A lot has happened since the IMF’s last major forecast. For example, China has scrapped its zero-covid policy and has begun a chaotic reopening of its economy. The number of corona infections there is now rising rapidly again, and that will probably have an impact on growth in the near future. Georgieva did not yet give concrete figures to CBS. The IMF should release an update of its global growth forecasts later this month.
In December, the IMF reported after a review that Belgium must make a saving effort of 0.8 percent of gross domestic product (GDP) next year. This amounts to a saving of about 4.6 billion euros. During the successive corona and energy crises, governments have dug deep into their pockets to support families and businesses. In addition, there has also been increased spending on defense and the aging population, among other things.
All this means that the budget deficit will increase in 2023. IMF Head of Mission Mark Horton emphasizes that Belgium’s deficit is “well above pre-pandemic levels” and well above a level that would allow the debt to stabilize. The IMF also advocates reforming automatic wage indexation.
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