Sooner or later, Analysts predict a global recession is inevitable for world nations in 2023 but no one has dared to estimate how severe it will be and how long it will take. The International Monetary Fund (IMF) also came to the same view. It warned that a major economic recession is looming for the world. Due to this recession, the gross domestic product (GDP) of the countries of the world will be reduced to the extent of 4 lakh crore dollars by 2026. IMF also believed that the GDP of countries that account for a third of the world's GDP will fall to negative levels for two consecutive quarters this year or next. The IMF also reduced the global GDP growth rate to 3.2 percent this year. She said that it may decrease further to 2.9 percent next year. This is the fourth time in a row that the IMF has cut its global GDP forecast this year. OPEC countries announced on Wednesday that they are reducing daily oil production by 20 lakh barrels from November. It is remarkable that the next day, the IMF MD warned of economic recession.
Possible reasons for coming economic recession
The
back-to-back pandemic hits the world economy like anything. All nations
including developed nations have thought of preparing to deliver vaccination
and imposed lockdown restrictions severely. There was no Economic activity for
at least a minimum of 1.5 years among world nations. Productivity
drastically comes down due to shut down of many product and manufacturing
sectors. All these countries have lost their source of income. The situation is
coming under control for some nations in the recent past but Covid blow will
last for many days in many countries
The
threat of this economic recession was caused by the Ukraine-Russia war. Though
it is not related to world nations, the impact was severe on many nations.
Inflation has surged and the economy has been disturbed by unwanted war.
People have never forgotten the bankruptcy of Lehman Brothers in 2007 which was a major world economic shrinking before the 2008 recession. Some analysts warn of another threat to the global economy. Europe's banking giants Credit Suisse and Deutsche Bank are at risk of collapse. Credit Suisse of Switzerland is one of the oldest and most influential banking institutions in the world. Shares of Credit Suisse are down nearly 60 percent so far this year. Also, the banking firm's Credit Default Swaps (CDS) premium hit a 14-year high (dating back to 2008). CDS is like an insurance for loans taken by any company. CDS premium also increases as the risk in loan repayments increases. In this background, the speculations are that Credit Suisse may collapse and another Leman Brothers will happen. Deutsche Bank is almost in the same situation. With more than 50,000 employees worldwide, the value of assets managed by Credit Suisse was over 1.6 trillion dollars at the end of last year.
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