ECONOMYNEXT – China’s slowdown amid the past tight Covid-19 control will have an impact on the global economic growth, the head of the International Monetary Fund (IMF) has said.
Kristalina Georgieva, the IMF chief, however said the debt distress among some countries are not systemically significant to trigger a debt crisis.
China’s economic growth which had accounted for more than a third of the global economy is estimated to its lowest in decades due to a longer Covid-19 lockdown.
Georgieva said China’s economic growth could slump down at par or below the global economic growth in 2023.
“For the next couple of month, it would be tough for China and the impact of Chinese growth would be negative and the impact on the region would be negative and the impact on the global growth would be negative,” Georgieva said on the CBS news programme Face the Nation.
“For most of the world economy, this is going to be a tough year, tougher than the year we leave behind,” she said.
“We expect one third of the global economies to be in recession. Even countries that are not in recession, it would feel like recession.”
The slowdown in China along with a similar slowing growth in the United States and European Union come amid a lingering war between the Ukraine and Russia and debt stress getting out of control in some emerging markets.
Georgieva named Chad, Ethiopia, Zambia. Ghana, Lebanon, Surinam, and Sri Lanka as the countries that are struggling with the debts and it is “very important” for the people of these countries that the IMF finds resolution to the debt problem.
“But the risk of contagious is not high. However, if that debt continues to grow, then let’s remember 25 percent of the emerging markets are trading in this territory. Then the world economy is in for a bad surprise,” she said.
“And this is why at the IMF, we are working very hard to press for debt resolution for these countries and we have engaged with the traditional creditors Paris Club, the non-traditional creditors, China, India, Saudi Arabia. Our call is very simple: “Urgently we have to act.”
“When I look at the debt map of the world, yes, we have to be concerned.” (Colombo/Jan2/2023)