Global economic growth is slowing, due to Russia’s invasion of Ukraine, China’s strict COVID lockdowns, and rising interest rates, according to the International Monetary Fund.
The world economy will grow 2.7% in 2023, down from 3.2% in 2022, the IMF predicted in a November report.
“In short, the worst is yet to come, and for many people 2023 will feel like a recession,” the organization said in the report.
The Ukraine war has increased prices for heating, gas, and food. China’s zero-COVID policies have kept people home from work in the world’s second-largest economy, disrupting the production of goods. And central banks in countries around the world have raised rates in order to control rising prices by weakening consumer demand.
The U.S., some economists say, is better off than other nations, notably those in Europe which have been impacted by high energy and food costs created by Russia’s attack on Ukraine. Inflation in the Eurozone increased 10.6% in October from a year earlier, up from 9.9% in September. In Great Britain, consumer prices jumped 11.1% in the past year.
“Energy and food are an essential part of your household budget,” Raghuram Rajan, a professor at the University of Chicago Booth School and a former chief economist at the IMF, told Vox. “The more you spend on essentials, the less you have on discretionary items, so you have to cut back on that spending.”
In Europe, stimulus measures were not as strong as they were in the U.S., where some households have retained pandemic savings. Also, unemployment is low in the U.S., creating a better economic landscape.
“We’re raising interest rates fairly aggressively and financial market conditions have tightened in the U.S.,” Ryan Sweet, Chief U.S. Economist at Oxford Economics, told Vox. “But so far, the economy’s weathered it reasonably well. Inflation is high in the U.S., but it’s high almost everywhere.”