A global recession may come in 2023. While it would wreak havoc on all parts of the globe, developing nations will be most affected. By Sebastian Shehadi, Investment Monitor.
Talk of an impending global recession has grown exponentially in recent months, with varying levels of gloom and doom. Among these voices is the UN Conference on Trade and Development (UNCTAD), whose October report gave stark warnings.
Rapid interest rate increases and fiscal tightening in advanced economies, combined with the cascading crises resulting from the Covid-19 pandemic and the war on Ukraine, have turned a global slowdown into a downturn, according to UNCTAD. “Monetary and fiscal policy moves in advanced economies risk pushing the world towards global recession and prolonged stagnation, inflicting worse damage than the financial crisis in 2008 and the Covid-19 shock in 2020,” it says.
This forecast, however, is not shared by all. Glenn Barklie, chief economist at Investment Monitor and head of foreign direct investment (FDI) services at GlobalData, says that while there is a possibility a global recession could become a reality in 2023, there will not be anything like the same impact as that of the 2008 financial crisis, as the parameters are notably different. As 2022’s crisis is primarily driven by inflation, governments must adopt a tightening of monetary policy to try to curb spiralling inflation and pandemic-induced debt burdens, he adds.