Just recently the World Bank announced that it was declining the world's economic growth percentage from 4.1% to 3.2%, even lower than the original projected 5.5% in 2021.
The 3 major crisis fueling this are the Pandemic, increasing inflation, and the crisis occurring in Ukraine. A CNN article reads that all of the world's biggest economic engines are suffering from the supply shock that has been created by Russia's invasion of Ukraine. Europe is at risk of losing its energy supply from Russia, China just experienced a 3.5% decrease in retail sales due to them locking back down in response to COVID outbreaks, and the United States' insanely high inflation is causing the country to teeter on the edge of high interest rates and recession.
To add to the world's struggles, smaller countries were already in debt to larger ones, as a result of borrowing during the Great Recession and the COVID 19 pandemic. As interest rates rise these loans are harder to pay back, along with the prices of food and fuel increasing as well. For these countries, getting by is extremely expensive.
None of this is very promising for the future state of the economy- the same article states that the CNN Business Fear & Greed index is currently in "fear territory."
https://www.cnn.com/2022/04/19/investing/premarket-stocks-trading/index.html
There has definitely been a lot going on in the world which would lead to economic decline rather than growth. It is somewhat contradictory though because the U.S. economy has been doing well despite the world as a whole doing poorly. I think that the high interest rates will be good for the world as a whole though because it will allow the bigger economies to move back towards a good steady state.
ReplyDeleteHopefully there war in the Ukraine will end soon, so the world can focus on recovering from the pandemic, and control inflation. It will be hard to juggle economic spending to Ukraine, and to help people affected from the pandemic. And control inflation at the same time.
ReplyDeleteA recession is very likely to happen. H The main thing that screwed most citizens of the U.S. over was the closure of the keystone pipeline. The pipeline caused oil barrel prices to rise from 30 to 130 dollars per barrel. Oil produces fertilizer and fertilizer produces food so rising prices in food will cause Americans to suffer.
ReplyDeleteIn a poll carried out on behalf of CNBC last month, 81 percent of US adults said they believe a recession is likely in 2022. By contrast, Goldman Sachs economists recently put the odds of a US recession in the next year at 20-35 percent. What do you think about it?
ReplyDeleteI think it is probably pretty likely that we will enter a recession at some point over the next two years, but I wonder if it will end up being as bad as the last major recession. If the pandemic settles down, and the war in Ukraine ends somewhat quickly, the next recession we have might not be as bad as they have been in the past.
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