Is the coming recession the one that we heard years ago?
What we heard about it will impact the world economy badly and inflation will touch the peak of Everest. Hopefully, I am wrong, but global economic organizations warned people to brace themselves for the upcoming recession coming in 2023.
Economic experts are saying that in 2023 inflation will rise and people strive to survive, but they are not sure that is this that mighty inflation that policymakers warned of years ago.
Is the recession started in the US?
As the recession started in the US following Europe, the Banks including the world bank increase their interest rates multiple times to cope with inflation.
Economic experts say that the economic growth rate in 2023 will be 3 times less as compared to 2021 which will be about 2%.
Some experts say that even increasing interest rates much high which might not be enough to overcome the economy to bring it down before covid19 pandemic.
Inflation due to the war between Russia-Ukraine
Economic experts said that the Ukraine-Russia war is accountable for the inflation in food and gas prices. Some experts say that this recession is overhyped and will not have a much bigger impact on the economy as well, while some say that we entered the recession, everyone has a different picture in his mind about the recession, but inflation is increasing day by day and things are out of reach from people of the middle class, some people have already started their strategies for the future to survive the recession while some are hoping that things will go back to the normal.
The duration of the recession is not certain because it all depends on the situation of the war between Russia and Ukraine which is not sure to anyone what will be the conclusion of the war.
Is the coming recession stronger than the 1970s?
Daily wage earners are on the leverage as compared to the fixed salary earners, because the food and grocery prices are increasing every passing day the fixed income earners have to cut their other expenses to meet the food inflation.
The upcoming recession will be harder than previous ones in history like in the 1970s, but this one in 2023 will not be able to recover damages like the previous ones according to the experts. The US is facing this type of inflation for the first time in the past 4 decades.
Struggle for developing nations and emerging economies
Economic growth around the globe is slowing rapidly and it is wrapping up the developing nations, it will mostly hit the developing nations with huge populations, and a lot of people will suffer inflation and unemployment. Emerging economies also found a struggle to step in the race to fight inflation.
Many analysts compare this recession with the iceberg in the ocean, which has most part beneath the ocean and is shallow beneath the ocean, it means that the recession will be at the very last edge of the iceberg beneath the ocean for a very long time then it will go up and came out of the ocean. The inflation in 2023 will be 5%, almost twice the previous 5 years’ inflation collectively.
Central banks increase interest rates to fight inflation.
Central Bank is applying the same strategy of 2021 this time also by increasing the interest rate by 2% to fight inflation, But the increase of that much growth in interest rate would slow down the GDP growth by 0.5% and would decrease per capita terms by 0.4%, this will the reason behind the global recession.
World bank president reviews.
World bank president David Malpass showed his concern about the long-lasting consequences of the recession as the global economic growth is slowed rapidly and will affect developing and emerging economies, according to him the policy makers should boost production instead of consumption to get economic stability and slow down the inflation and policymakers should focus on to generate investment to and improve productivity to fight poverty, the following. The policymakers had, The research is to analyze the outcomes of previous recessions with the current recession, which allows going with countercyclical policy to brace economic activity, but the warning of inflation and tight fiscal space which not allow spending even for the desired purpose which encourage policymakers to discourage the countercyclical policy even the downfall of the global economy.
Experiencing the 1970s recession and the policy used in the 1975 stagflation, policymakers are forced to use the module of the 1982 recession policy by keeping inflation, high for a long duration to combat the coming recession of 2023.
World bank vice president Ayhan Kose believes that the demand to use the policy of the previous recession will reduce inflation, according to him developing nations and emerging economies should make themselves prepared for the tightening of policies globally.
Central bank efforts to control inflation.
Central Bank could control inflation and avoid the recession through the collaborative action of the policymakers.