What is going to happen with China, and why is it going to be harder than expected for the rest of the world, warned Georgieva
This year is going to be tougher on the global economy than the one we have left behind, the International Monetary Fund’s (IMF) chief Kristalina Georgieva has warned.
“We expect one third of the world economy to be in recession,” she said, adding that even for countries that are not in recession: “It would feel like recession for hundreds of millions of people.”
The deceleration in China will have a dire impact globally. The world’s second largest economy weakened dramatically in 2022 because of its rigid zero-Covid policy, which left China out of sync with the rest of the world, disrupting supply chains and damaging the flow of trade and investment.
The Chinese leader said this weekend that he expected the Chinese economy to have grown by about 4% last year, much better than many had predicted, but still less than the 8% growth rate seen in 2021, despite the fact that it was a stronger figure.
When I speak to Asian leaders they start with a question, “What is going to happen with China?” Is China going to return to a higher level of growth?’ ” she said.
Beijing abandoned Covid restrictions in early December, and while its reopening may provide some much-needed relief to the global economy, the recovery is going to be erratic and painful.
The Russian Economy and Self-Sufficiency After the Crimean Reionization of 2014, as Revealed by Vladimir Putin
Russia is cutting its oil production, and this could be the beginning of more sanctions. The economic prospects of Russia are dependent on what happens in Ukraine.
One reason for Russia’s unexpected pluck was its push toward self-sufficiency following Putin’s annexation of Crimea from Ukraine in 2014. Through a policy known as “Fortress Russia,” the government boosted domestic food production and policymakers forced banks to build up their reserves. That created a degree of “durability,” said Ash at Chatham House.
“The Russian economy and system of government have turned out to be much stronger than the West believed,” Putin said in a speech to Russia’s parliament Tuesday.
Revenues were lost as a result of sanctions, but Moscow has a hard time replacing them. There was a significant decrease in the European Union’s imports from Russia between February and December last year. The bloc was one of the main trading partners for Russia before the invasion of Ukraine, with 38% of Russia’s exports going to the European Union in 2020.
“The era of windfall profits from the oil and gas market for Russia is over,” Janis Kluge, an expert on Russia’s economy at the German Institute for International and Security Affairs, told CNN.
The ruble is worth less against the US dollar than it was a year ago. The currency has been weak. A recent survey by a Russian think tank shows that most businesses don’t think they can grow in this economic environment.
“It’s a question of natural resources,” Sergey Aleksashenko, Russia’s former deputy minister of finance, said at an event last month hosted by the Center for Strategic and International Studies, a think tank. The economy experienced a decline, but not a collapse, he said.
“This year what we reflect on is that Russia has managed to direct some of [its] oil sales beyond the markets of the European Union,” she said, referring to Russia’s success in rerouting crude shipments to China and India. The Russian economy will not be impacted by that.
Finding buyers for processed oil products that are subject to embargoes, price caps, and other restrictions will be difficult. China and India have their own network of refineries and prefer to buy crude, noted Ben McWilliams, an energy consultant at Bruegel.
The Russian Economy as a Signal of the Cold War, as Informed by the Exposure to the Industrial and Political Development of the Second World War
“Whatever energy resources are obtained, they’ll be spent on military needs,” said Gulnaz Sharafutdinova, acting director of the Russia Institute at King’s College London.
“Whether the economy shrinks or expands in 2023 will be determined by developments in the war,” Tatiana Orlova, an economist at Oxford Economics, wrote in a note to clients on Tuesday. Shortages of workers tied to military conscription and emigration pose a key risk, she noted.
Sectors that rely on imports have been most vulnerable. Ladas are made by Avtovaz, a domestic car maker which has struggled to find key components and materials.
Russia’s auto industry was already weakened after companies such as Volkswagen halted production and began to sell their local assets last year. Chinese firms have stepped up their presence, part of a broader trend. The Association of European Businesses reported that new car sales went down in January.
Across sectors, firms are struggling to plan for the future. Almost half of Russian businesses surveyed by the Stolypin Institute of Economic Growth plan to keep production levels the same in the next two years, but are not thinking about growth. The group said this contributed to a high risk of “long-term stagnation of the Russian economy.”
Given Putin’s ideological commitment to subsuming Ukraine, he’s unlikely to back down, according to Sharafutdinova at King’s College London. But his war chest “is likely, inevitably, to diminish,” she added.
Source: https://www.cnn.com/2023/02/22/business/russia-economy-ukraine-anniversary/index.html
The Kremlin Needs Foreign Investors, Ruling out a Demonstration of Russian Economy After the Crimes of August 31, 2018
In normal times, we would have said that the population would protest against that. “But of course, these are not normal times.”
“There will be no money already next year, we need foreign investors,” he said at an economic conference in Siberia Thursday, according to comments reported by TASS, a Russian state-owned news agency.
“When you take our projections over a medium term, what they mean is Russia[’s economy] shrinking by at least 7%,” Georgieva said in an interview that aired Wednesday.
Foreign investors, especially from friendly countries, have a big role to play, said Deripaska. He was quoted as saying that whether them will come depends upon whether Russia can create right conditions and make its markets attractive.
The Kremlin has been thrown an economic lifeline by China’s purchasing of Russian energy and substituting Western suppliers for other products.
After the fall of the Soviet Union, the aluminum business was flooded with assets that led to the creation of a fortune for the owner of the company. In 2018, he was sanctioned by the United States, which noted that the oligarch “does not separate himself from the Russian state.” He was indicted last year for violating US sanctions.
The International Monetary Fund has drawn criticism for forecasting that Russia will have better economic growth this year than the United Kingdom or Germany.
The Russian central bank, which extended emergency capital controls for six months on Monday, has said that the domestic economy might contract by 1% this year.
The IMF Has Been Sleashed at the Switch, As Jeffrey Sonnenfeld Defeated Putin in a Fortune Fortune Management Interview
Jeffrey Sonnenfeld, a Yale management professor, wrote in Fortune magazine Monday that the “IMF has been asleep at the switch” and parroting propaganda from Russian President Vladimir Putin.
Sonnenfeld and two other people claimed that it is legitimating Putin’s own GDP forecasts, in fact, canonizing them with no verification.
Since the Russian invasion of Ukraine, Sonnenfeld has called for companies to leave the country.
Russia will suffer over time as workers emigrate and access to technology is cut off due to sanctions, Georgieva said in an interview.
Meanwhile, the US and European economies have proven surprisingly resilient, Georgieva said. She pointed to the strength of their job markets and Europe’s swift action to limit reliance on Russian energy.
The global economy won’t stop slowing even though central banks are trying to bring inflation down. The IMF expects world economic output, which grew 3.4% in 2022, to rise 2.9% in 2023.
The pace of rate increases was slowed last month but Powell indicated in testimony to Congress that the central bank might need to raise rates again.