Rising Recession Risks


As the global economic outlook continues to slide and recession risks mount, the International Monetary Fund will once again lower its growth forecast.

As IMF Managing Director Kristalina Georgieva said during a speech at Georgetown University, we estimate that countries that account for about one-third of the world economy will be in for at least two consecutive quarters this year or next year, CNN reports. will experience contractions.”

The IMF estimates that the world could lose $4 trillion in economic output between now and 2026.

“This is the size of the German economy, a huge blow to the world economy,” the IMF said, according to CNN.

The Bulgarian economist, he said, was living after the shock in less than three years. With rising commodity prices in India and around the world, geopolitics is contributing to rising inflation.

Morgan Stanley said in a recent research that supply-constrained growth in oil prices is generally bad for India’s macro and markets, although changes in current account funding dynamics are mitigating the impact.

In emerging economies, weak external demand and a strengthening dollar will weigh on growth, foreign brokerage, Credit Suisse, predicted in a report, adding that the worst is yet to come for the global economy.

Inflation is likely to peak in most emerging economies, the report said, but central banks should continue the long walk until at least the end of 2022.

“Overall, the economic environment for risk assets is deteriorating. Stability in global industrial production, persistent cost pressures and rising financing costs all suggest a longer period of reduced risk appetite,” Credit Suisse said.

The RBI has raised the repo rate by 50 basis points to 5.90 per cent, said a report by the State Bank of India’s Department of Economic Research, as the MPC seeks to focus on return of housing to ensure that inflation targets stay inside.

While the central bank retained its CPI inflation estimate for FY13 at 6.7 per cent, it cut real GDP growth projections for FY13 from 7.2 per cent to 7 per cent and for FY24 to 6.5 per cent. The CPI is likely to remain above 6 per cent for the first three quarters of FY23.

The report further noted that imported inflationary pressures remain an upside risk to the future inflation trajectory, exacerbated by the continued appreciation of the US dollar. “We believe a 35 bps rate hike in December is looking easy, but after December it will be touch and go,” the report said.

MarketWatch reported that the dollar wrapped up its biggest quarterly climb in at least seven years last week with its biggest advance of four months since November 2008 – a historic year for the greenback.

In September, a month when the dollar touched its highest level since 2002, the dollar index rose 3.2 percent, its best month since April, when it rose 4.73 percent.

“OPEC Plus said on Wednesday it would cut oil production by 2 million barrels per day, the biggest cut since the start of the pandemic,” CNN reported.

The group of major oil producers, which includes Saudi Arabia and Russia, announced production cuts after their first meeting in person since March 2020. This shortfall is equivalent to about 2 percent of global oil demand.

Brent crude oil prices rose more than 1 percent to about $93 a barrel on news reports made gains ahead of a gathering of oil ministers this week. US oil rose 1.5 percent to $87.75.

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