HomeWorldWorld may face recession next year: World Bank report

World may face recession next year: World Bank report

The World Bank said in a new report that the world could face a recession next year amid simultaneous monetary policy tightening by central banks around the world, which include removing supply barriers to boost production and reduce inflation. removed has been called.

The report said that many indicators of a global slowdown are already “brightening signs”. It said that the global economy is now in the sharpest recession since the 1970s after its post-recession recovery.

The bank said global interest rate hikes by central banks could reach 4%, which is double in 2021, only to keep core inflation – which keeps volatile commodities such as food and fuel – at 5%. Yes, the bank said.

From the US to Europe and India, countries are aggressively raising lending rates, aimed at curbing the cheap money supply and thereby helping to reduce inflation. But such monetary stricture has a cost. This slashes investment, lowers the cost of jobs, and suppresses growth, a trade-off facing most countries, including India.

“Global growth is slowing rapidly, and is likely to slow further as more countries fall into recession. My deep concern is that,” World Bank President David Malpass said in a statement after the report was released on Thursday. These trends will persist with long-lasting consequences, which are disastrous for people in emerging markets and developing economies.

The world is facing record inflation due to a number of factors, including the Ukraine war, which has reduced food supplies, the effects of the pandemic on supply chains, poor demand due to continued COVID lockdowns in China, and extreme weather that raised agricultural forecasts. Have given. Output

The Reserve Bank of India (RBI) in August announced the third repo rate hike to 5.40%, which is 50 basis points. One basis point is one hundredth of a percentile. RBI retained its inflation forecast for 2022-23 at 6.7%, while forecasting real (inflation-adjusted) GDP growth at 7.2%.

According to official data, India’s retail inflation rose 7% in August compared to a growth of 6.71% in July. Consumer inflation remains above the central bank’s limit of 4% (+/-2%) for the eighth consecutive month.

The latest World Bank report has underlined that simply raising interest rates may not be enough to quell inflation caused by supply constraints and countries should focus on increasing the availability of goods.

In a statement highlighting recession fears, based on a report by World Bank economists Justin-Damien Guinet, M Ayan Kos and Naotaka Sugawara, Malpass said, “Policy makers shift their focus from reducing consumption to increasing production. can.” The report said central banks should continue efforts to stamp out inflation without triggering a global recession.


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