Survey claims: The world is heading towards recession, yet central banks are increasing interest rates

Posted on 27th Oct 2022 by rohit kumar

While the global economies are heading toward recession, on the other hand, the central world is increasing interest rates aggressively to control inflation. The worst effect of the increase in interest rates is on the growth rate of the economies. Therefore, in a Reuters survey, economists have reduced the growth rate of major economies compared to earlier.

 

 

 

However, the good news is that most large economies that have fallen into recession or are rapidly heading toward recession have lower unemployment levels than in previous recessions. The gap between the growth rate and the unemployment rate may remain the lowest in four decades.

 

 

Economists said, the period of recession will be short and its impact will not be very deep. However, relief from inflation is not expected soon. It will remain high for a long time. It further states that most of the world's largest countries have increased interest rates by up to two-thirds of the limit to reduce inflation.

 

Economists have cut the growth rate of major economies

04 The gap between the economic growth rate and the unemployment rate may remain the lowest in the decade

 

Central bank fails to estimate inflation

 

The central banks of many large countries of the world failed to estimate inflation. They have raised interest rates several times this year. Most economists and central banks believe there is not much left for them to do next year. "Everyone is talking about the risk of a global recession," said Michael Avery, global strategist at Rabobank. If we look at the trends in the major economies, it is not difficult to guess.

 

Only 6 out of 22 central banks surveyed believe that inflation will be within their target range by the end of next year.

 

A low unemployment rate is also a problem

 

The low unemployment rate is also a problem, Avery said, because it takes time to see its effects. As long as it remains low, central banks will feel that they have room to raise interest rates.

 

70% of economists believe that the forecast for a sharp increase in the unemployment rate in the coming years is too low.

 

In the last 18 months, we have failed to estimate inflation correctly. So it is natural to ask what happens if inflation crosses the target. The answer is... it stays high over a long period.

 

The global growth rate may remain at 2.3 percent

According to economists covering 47 major economies, the global growth rate could be 2.3% in 2023. This is lower than the earlier estimate of 2.9 percent. However, after this, the growth rate may increase to 3.0 percent in 2024. At the same time, more than 70 percent of economists claimed that in the economies they cover, the situation will get worse in the next six months.

 

predictions about India

 

The growth rate may remain at 6.9% in 2022-23

GDP will grow at 6.1% in 2023-24

China's growth rate may be 3.2 percent in 2022

The US Federal Reserve may raise interest rates for the fourth time in November.

 

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