India, China to account for half of global growth in 2023: IMF

The International Monetary Fund (IMF) managing director Kristalina Georgiva said that India and China are expected to account for half of the global growth in 2023. She added that the world economy is expected to grow at lower than 3 per cent this year. 

"Some momentum comes from emerging economies Asia especially is a bright spot. India and China are expected to account for half of the global growth in 2023. But others face a steeper climb," Georgieva told the news agency PTI. 

She further warned that a sharp slowdown in the world economy last year triggered by the COVID-19 pandemic and the Russia-Ukraine war could linger on this year as well. The Russia-Ukraine crisis led to the global growth rate in 2022 dropping by almost half from 6.1 per cent to 3.4 per cent, Georgieva added. 

But for how long is this slow growth phase going to last? The IMF boss believes that the phase of slower economic activity will be prolonged as the next five years will witness less than 3 per cent growth. This, according to the IMF chief, is “our lowest medium-term growth forecast since 1990, and well below the average of 3.8 per cent from the past two decades.”

She added that slower growth will make it more challenging for the low-income countries to catch up. She explained, “Poverty and hunger could further increase, a dangerous trend that was started by the COVID crisis.” 

Georgieva added that lower-income countries will be crippled with high borrowing costs at a time of weakening demand for their exports. She also noted that about 90 per cent of advanced economies are projected to witness a decline in growth rates in 2023. 

Talking about the banking crisis, Georgieva said while the global banking system had “come a long way” since the 2008 crisis, “concerns remain about vulnerabilities that may be hidden, not just at banks but also non-banks.” 

"Now is not the time for complacency," she said while signing off.

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