You can add the World Bank to the chorus of recession alarm bells. In his latest view, World Bank president David Malpass said “for many countries, a recession will be difficult to avoid.”
Malpass joins many others on Wall Street and central banks around the world who are starting to experience a sharp economic downturn.
JPMorgan Chase (JPM) CEO Jamie Dimon Referred to an economic “hurricane” on the horizon last week ad interim Tesla (TSLA) Elon Musk said he had a “very bad feeling” about the economy.
The reason for the shadow? Malpass said on the World Bank’s modern outlook Tuesday that “war on Ukraine, lockdowns on China, supply disruptions & risks of stagflation are hitting growth.”
This is what the German economy minister proposed to tackle inflation, stagflation, a combination of stagnant economic growth and high inflation, for the first time.
This trend is reminiscent of experts and older consumers in the late 1970s, a time of shock and an indolent economy that led to two downturns, what are considered double-dip recessions, in the early 1980s.
Investors rattled information that the Federal Reserve was raising interest rates militantly to try & depress prices. The problem, however, is that some people fear the Fed is too late to start its campaign to fight inflation. As a result, the central bank could trigger a default as it rushes to pursue more rate hikes.
The prospect of higher short-term interest rates according to the Fed has resulted in an imbalance in the output of these long-term Treasury bonds. Mortgage rates also skyrocketed, resulting in the housing market being used up dramatically.
Businesses are also struggling to use higher profits to create commodities & wages and now have to compete using higher interest rates which jeopardize their profits too.
add all & easy to see why the World Bank is getting. The international lending organization now expects the world economy to grow at an annual pace of just 2.9% this year. That’s down sharply by a 5.7% growth rate a year later and the World Bank’s January 2022 assumption of 4.1%.
“The recovery from the stagflation of the 1970s-the demand for a sharp increase in interest rates in primary developed countries, which triggered a financial crisis in emerging markets and developing economies,” said the World Bank on its new assumptions.
The World Bank does not expect a major rebound anytime soon. It said world growth should “float around” the 2.9% level for next year and 2024, describing the next few years as “a protracted period of weak growth and rising inflation.”
Crisis will always come, but there is no word to lose and give up for every challenge that comes to face our Challenges. History proves how difficult and big the problems we face can always get through.