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| Recession to hit one-third of the world economy in 2023: IMF Report |
| 2023-01-03 |
It’s generally useful to know that the important people ae telling each other. [KhaamaPress] Based on the central economic and business research centre, the world economy is headed for a recession in 2023. Similar research by the International Monetary Fund (IMF) has warned that one-third of the global economy will be in recession this year.Kristalina Georgieva, IMF Chief, in an interview with CBS on Sunday morning, said that the world would face a challenging year as the three major world economies are experiencing a slowdown, the United States, China and Europe. "We expect one-third of the world economy to be in recession. even in countries that are not in a recession, it would feel like a recession for hundreds of millions of people," she added. REASONS FOR GLOBAL ECONOMIC RECESSION The reasons for a global recession have been enumerated, like the COVID-19 Pandemic, the Geopolitical contests among great powers, the Ukraine war, and the rise in interest rates in response to higher inflation. First, the spread of the novel Corona Virus has been considered a significant damage to the world economy despite humanitarian losses and desperation. The COVID-19 Pandemic has spread with alarming speed, infecting millions and bringing economic activity to a near-standstill as countries imposed tight restrictions on movement to control the spread of the Virus. Such a scenario led to the most significant economic shock the world has experienced in decades. Second, the growing geopolitical competition between the world’s great powers diverted their attention away from working together and toward competing instead, which further hampered the state of the global economy. As a result, increased geopolitical risk has been a consistent characteristic of international politics throughout the past two decades. Consequently, the global economy and financial markets have completely ignored it. Even though there is competition between China and the United States, the development of populist rulers in Latin America, and tensions in the Middle East, businesses and investors have continued their operations because they believe the economic repercussions will be contained. Third, Russia-Ukraine is another major factor. This pattern is expected to be broken due to Russia’s invasion of Ukraine, which will cut off the world’s 11th-biggest economy and one of the largest producers of commodities from the global market. The immediate worldwide ramifications of tighter sanctions will be more outstanding prices, slower GDP, and some disruption in financial markets. These effects will be seen immediately. Fourth, the ratio between inflation and interest rates is inversely proportional. People tend to borrow more from banks and put less money away when interest rates are low. The supply and demand for money in the economy will increase. Consequently, the commodities’ prices go up, contributing to overall price inflation. The COVID-19 Pandemic, geopolitical rivalry among the great powers, the war between Russia and Ukraine, and inflation are thought to be the primary causes of the global economic crash. |
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