Global Recession 2023. Biggest Recession in 50 years

 

The World Bank has put out a dire prediction that affects all of us .It believes that the global economy may fall into a recession next year. These reports are released frequently; they give us a sense or a broad assessment of the global economy while the fears of a global recession are not. Not many experts were optimistic that a soft landing is possible but this latest assessment is now sounding like an alarm we might be getting closer to a Recession. So here now are some quick takeaways from that World Bank report the global economy is facing a steep slowdown something we haven't seen since the 1970s. A series of problems have created this situation high inflation for one supply chain problems tighter market conditions where investments have slowed down these are all contributing to this there are three economies that are dragging growth down in particular the United States China and the Eurozone.

 The slowdown there is impacting everyone we all know how we got here. It began with the pandemic when the world went into a lockdown, governments intensified spending and they pumped money into the economy to prevent a complete Collapse.

 Citizens and businesses were given stimulus to make sure that they can survive and sustain themselves during the pandemic. Banks were asked to intensify lending, central banks decided to cut interest rates so there was more money in the system essentially but this year the Russian Invasion of Ukraine triggered a cost of living Crisis. There was a shortage of essentials from food to fuel and wherever there is a shortage the prices go up naturally and that's why inflation rates around the world shot up.

 Central banks rush to tame the situation, they increase interest rates it has made borrowing more expensive. So effectively central banks are trying to squeeze the excess money out of the system now and that's what the World Bank is concerned about the higher the interest rates they could trigger a global recession.

 Now don't get me wrong central banks are using a tried and tested tool to tame inflation but it is rather a double-edged sword because if you don't make adequate cuts inflation gets out of hand and if you make sweeping cuts it could slow down the economy.

 Altogether the challenge is to find the right balance so how are the central banks faring are they doing too much or too little. The World Bank says that the rate cuts go so far may not be sufficient, this might not be able to bring down inflation.

Global core inflation rate could stay above five percent in the year 2023 and that is almost double of the five years average before the pandemic. This estimate doesn't include energy prices and we all know how even a minor fluctuation on that front can impact Inflation so interest rates could rise further the world bank is suggesting an increase of two percentage points which means that growth rates will slow down further. Already a slowdown is visible earlier the International Monetary Fund or the IMF revised its growth estimates. It predicted the global economy will grow by 3.2 percent this year and 2.9 percent next year but the IMF is a little more optimistic in its projections it says some countries will slip into a recession next year but it is too early to save the entire global economy would be affected.

Investors are not taking any chances, however Indian markets crashed today the Sensex fell by over 1 000 points and the nifty by over 300 points next week Central Banks of the United States and the United Kingdom are expected to increase interest rates yet again and we of course will keep a track of all these developments beyond words.