Malta is set to avoid a recession in 2023, but the same can’t be said for other large and developed economies. Kristalina Georgieva, head of the International Monetary Fund (IMF), warned of a tough year ahead, with the US, EU and China expected to see their economies slow down.
The IMF is an international organisation with 190 member countries which monitors the international monetary system and global economic developments to identify risks and recommend policies for growth and financial stability.
The economic downturn is expected due to inflation triggering higher interest rates, along with a rising cost of living and COVID-19’s resurgence in China, according to BBC’s reporting.
“Even countries that are not in recession, it would like a recession for hundreds of millions of people,” Ms Georgieva told CBS news.
This was echoed by Katrina Ell, an economist at Moody’s Analytics, who added, “Europe is will not escape a recession, while the US will be teetering on the edge.”
China’s recent decision to scrap their zero-COVID policy is expected to have a negative effect on its public’s wellbeing, due to inadequate vaccination. Over the next few months China’s economy is also expected to contract. The country’s factory activity shrank in the last three months, at the fastest rate in almost three years, due to the spread of COVID-19, according to the official purchasing managers’ index (PMI). Due to China’s integral role in global supply chains, this is expected to have a global ripple effect.
This is compounded by rising interest rates in the US and other countries, which makes borrowing more expensive, resulting in fewer investments both domestically and internationally.
While Malta’s expected to scrape through 2023 without a recession hitting its own shores, the risk is still present, and Malta will inevitably feel the effect through its trading partners.
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