It is only the fourth day into the new year when the world has stepped in with expectations. The people of the world welcome each year with expectations. But alarming warnings are emerging from global financial organizations and rating agencies that the new year could be marked by a severe recession. A report by the Center for Economics and Business Research (CEBR) was released on December 22. CEBR presented its concerns to the world through research that combined existing conditions and conclusions about the future economy. The CEBR report points out that many countries globally are facing inflation and new loans will be needed to overcome it, which will lead to a crisis in the economies. Subsequently, the International Monetary Fund (IMF) forecast was released on January 2. The IMF had already assessed last October that the world economy is facing a serious crisis. At the time, the IMF had forecast that there would be a two percent decline in the global GDP rate. But their warning from the other day is worrying the whole world. IMF chief Kristalina Georgieva said a third of world economies, including large countries, would face an economic downturn this year.
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The head of the IMF stressed that the main reasons for the recession are the covid epidemic, the ongoing Ukraine-Russia war, the fuel crisis and the price hikes that have gripped many countries of the world because of these. Even such giants as the United States, China and the European Union, described as the main engines of the world economy, will face a recession. The conclusions of Wall Street have also emerged. Their main warning is that they will face an unprecedented recession. This warning is given by multiple organizations on Wall Street, which is now known as the financial center of not only the United States but also the world. Barclays Capital has concluded that 2023 will be the worst year for the global economy in four decades. The Ned Davis Research Institute predicts a 65% chance of a global recession. Fidelity International was of the opinion that reaching a difficult situation was inevitable. One thing mentioned in the IMF chief’s warning is noteworthy. One third of the world economy is projected to be in recession, but even in countries that are not in recession, billions of people will be affected.
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Prior to this, the world faced a severe recession in 2007. We have seen economic structures, including the United States, which many have claimed to be the world’s great powers and have solid foundations, from the grip of the recession that lasted until 2009. But at that time, our country survived the global recession thanks to the strong public sector presence that existed here. Banks and public sector businesses, including the insurance sector, have been hailed as tools to prevent collapse. It was a time when neoliberalization policies had begun to be vigorously implemented, but the public sector had not been completely sold out. Thus, proponents of liberalizing economic policies have faced much opposition. The need of the public sector has once again been realised. But today the situation has changed. In the 13 years since 2009, the country’s public sector has become increasingly weak. Public sector banks, other financial institutions and insurance companies, which helped contain the global recession, have increasingly been privatised. The sale of public sector enterprises is seen as an easy way to raise funds and special plans are being drawn up to divest even the few remaining enterprises. In this new situation, it will be impossible for our country to hold on even if the recession does not directly affect it. The real implication of the IMF chief’s comment that billions of people will feel the recession even in countries not hit by the recession is that India needs to worry too.
