IMF Expects One-Third of the World Economy To be In Recession in 2023, What’s In Store for Crypto?

We are already kickstarting the new year of 2023, and the commentary from the International Monetary Fund (IMF) doesn’t look at all exciting for the global economy.

International Monetary Fund (IMF) Managing Director Kristalina Georgieva shared her prediction for the year 2023 adding that one-third of the global economy will be in recession in 2023.

In an interview with CBS aired Sunday, January 1, the IMF director said that the U.S., the EU, China seal be facing major economic challenges this year. She added: “This is what we see in 2023. For most of the world economy, this is going to be a tough year, tougher than the year we leave behind. Why? Because the three big economies, U.S., EU, China, are all slowing down simultaneously”.

However, the IMF director further added that the United States is the most resilient and can avoid a recession as the labor market is quite strong at this point. But this could prove to be a “mixed blessing” as per Georgieva since a strong labor market could be that the Fed might keep interest rate higher for a longer period of time in order to bring the inflation down.

Apart from the U.S, the IMF director commented on other big economies like the China and the EU. She said: “The EU was very severely hit by the war in Ukraine. Half of the European Union will be in recession next year. China is going to slow down this year further. Next year will be a tough year for China. And that translates into negative trends globally”.

She further added that China has slowed down dramatically in 2022 due to its strict Covid policy. For the first time in the last 40 years, China’s growth has been below the global growth. This has never happened before.

Commenting further on the state of emerging markets as well, she stated: “When we look at the emerging markets in developing economies, there, the picture is even direr. Why? Because on top of everything else, they get hit by high interest rates and by the appreciation of the dollar. For those economies that have high level of that, this is a devastation. We expect one third of the world economy to be in recession … Even countries that are not in recession, it would feel like recession for hundreds of millions of people”.

Georgieva stated that it will take a longer time to move to the pre-Covid predictability. She sees more certainty and crisis going ahead.

If the predictions of the IMF director come to be true, we can expect a spillover of recessionary effect in the crypto space as well. Currently, investor confidence in crypto is already at an all-time low and any further deterioration of the global macros is only going to make things worse.