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IMF chief cautions of ‘tough year’ for world economy
KUWAIT CITY, Jan 5: The International Monetary Fund stated that the outlook for the Kuwaiti economy is subject to uncertainty and risks surrounding the external environment including the potential effects of monetary policy tightening in major advanced economies and further global slowdown, reports Al-Rai daily. The IMF expert mission, on the occasion of the end of its visit to the country, explained that fluctuations in oil prices and the quantities of its production, as a result of external factors including the geopolitical environment, would affect economic activity. The delay in major financial and structural reforms may lead to an increase in the risks of pro-cyclical financial policies, impeding progress towards greater economic diversification and increased competitiveness.
It stated that it expects the output growth to rise to more than eight percent this year, but in 2023 it was likely that growth would decline, reflecting the slowdown in external demand for oil and the reductions in its production under the OPEC+ agreement.
The IMF stressed that the government has so far been able to contain the direct negative repercussions of the Russian war in Ukraine, and contain inflation by taking advantage of monetary tightening and limited passage of increases in global food and energy prices, thanks to government subsidies and controlled prices.
Meanwhile, Managing Director of the International Monetary Fund (IMF) Kristalina Georgieva said that 2023 is going to be “a tough year” for the world economy, “tougher than the year we leave behind.”
“The three big economies, US, EU, China, are all slowing down simultaneously,” Georgieva told CBS network on the New Year’s Day. “The US is most resilient. The US may avoid recession. We see the labor market remaining quite strong. “This is, however, a mixed blessing, because, if the labor market is very strong, the Fed (Federal Reserve) may have to keep interest rates tighter for longer to bring inflation down,” she explained.
Since the European Union is “very severely hit by the war in Ukraine,” half of the EU economies “will be in recession next year,” IMF chief cautioned. On China, she said, “For the first time in 40 years, China’s growth in 2022 is likely to be at or below global growth.” “And looking in to next year, for three, four, five, six months, the relaxation of COVID restrictions would mean bushfire, COVID cases throughout China,” she noted. “For the next couple of months, it would be tough for China. And the impact on Chinese growth would be negative. “The impact on the region would be negative. The impact on global growth would be negative,” she added.