Recession will hit the global economy in the next year

Washington: Kristalina Georgieva, Managing Director of the International Monetary Fund (IMF), warned that the situation developing in the last three months is darkening the future of the global economy. The threats for the economy are increasing and the possibility of the Global economy being hit by recession in the next year cannot be denied.’ The IMF chief indicated that the economic growth rate would decline even in the year 2022, as compared to the last year. Georgieva clarified that record inflation, increasing interest rates, slowing down of Chinese economic growth and the Russia-Ukraine conflict are the factors responsible for this.

The IMF chief made this prediction regarding recession during an interview with a private news agency. Kristalina Georgieva warned ’As per the recently declared statistic there has been a decline in the economy in the leading countries including China and Russia, for the second successive quarter. The threats are increasing consistently. This is a challenging year, but the threat will increase further in the next year. Therefore, there is a significant threat of recession in the global economy in 2023.’ She also pointed out that recession could be a price to be paid for bringing the raging inflation under control.

The global economy suffered significant losses in the first half of 2020 and 2021, given the Coronavirus pandemic. The economy was on a recovery path after that. Last year the global economy succeeded in recording a growth of 6%. It was being hoped that the global economy would gain fresh momentum in 2022.

But the situation started deteriorating given the Russia-Ukraine conflict. As per a report published by the IMF in April, the global economic growth rate could slump to 3.6% in 2022. The IMF will release a new report at the end of this month. IMF chief Kristalina Georgieva indicated that the economic growth rates will have further declined in this report. Other than the IMF, renowned financial institutions like World Bank, Bank of America and Nomura Holdings also have predicted a global recession.

A report by the ‘UN Development Program’ only a few days ago pointed out that interest rates are increasing to contain the rising inflation, creating the threat of a global recession.