Jakarta, CNBC Indonesia – The signs of a recession next year are spreading more and more after some countries experienced an economic slowdown.
The slowdown emerged in developed countries, including giant economies like China, the US and the UK. This recession is a consequence of the precipitous post-pandemic economic recovery, one of which was affected by the blows of the wars between Russia and Ukraine.
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The World Bank, the International Monetary Fund (IMF) and the Asian Development Bank (ADB) have repeatedly raised the dangers of a recession in 2023. Now, the world’s best finance minister 2018 version of the Dubai Sri Mulyani World Government Summit it also revealed signs of a deepening recession.
In the presentation of OUR State Budget for August 2022 on Monday (9/26/2022), Finance Minister Sri Mulyani predicted that the world together would plunge into a recession in 2023.
This recession was triggered by high inflation due to soaring food and energy prices in a number of countries, most notably in Europe and the United States. High inflation pushes central banks in developed countries to raise interest rates and tighten liquidity.
He stressed that this policy will have an impact on world economic growth. Indeed, developing countries are also affected.
“If central banks around the world raise interest rates to an extreme level and together, the world will experience a recession in 2023,” he said Monday, during the press conference on the US budget (9/26/2022) .
“The rise in central bank interest rates in developed countries is quite rapid and extreme and has affected the growth of these countries,” continued Sri Mulyani.
The benchmark interest rate in the UK was recorded at 2.25% or up 200 basis points (bps) and in the US it reached 3.25% after a 300 basis point increase. Meanwhile, the US is expected to rise again by 75bps and Europe by 125bps.
“This is an extreme increase, so far Europe has been very low in terms of the reference rate,” said Sri Mulyani. In the second quarter of 2022, he saw that the economic growth of China, the United States, Germany and the United Kingdom had corrected.
Sri Mulyani sees that this condition is destined to persist in the third quarter and until the end of the year. “So growth forecasts began to emerge this year and next year, including the recession,” he said.
Previously, the World Bank said the world was in danger of facing a global recession in 2023.
The World Bank said the global economy is currently experiencing the sharpest slowdown since the post-recession recovery since 1970. Global consumer confidence has fallen much more sharply than in the previous global recession.
It is evident from the three largest economies in the world, the United States, China and the European region, which have experienced a sharp slowdown. “Under such circumstances, even a moderate blow to the global economy in the next year could plunge it into a recession,” the World Bank wrote in its report, quoted Monday (9/19/2022).
The current economic slowdown, according to the World Bank, requires policies countercyclical to protect the community and economic activities.
Complementing the World Bank’s predictions, the director of the International Monetary Fund (IMF) Kristalina Georgieva also opened her voice on the threat of a recession that has hit the world.
He said an economic downturn was likely. Kristalina said the outlook for the global economy has been “significantly dark” since last April. As a result, the IMF also expects global economic growth of 3.6% for 2022.
He called the global recession caused by several things happening almost simultaneously. Such as a more universal spread of inflation, a more substantial rise in interest rates, a slowdown in China’s economic growth, and an increase in sanctions related to Russia’s war in Ukraine.
Asia dragged
While nearly half of the world is in danger of falling into recession, the Asian economy is taking a hit. The Asian Development Bank (ADB) lowered its economic growth forecasts in developing Asia and the Pacific, amid growing challenges including central bank tightening, the impact of prolonged Russian invasion of Ukraine e confinement COVID-19 recurring in China.
The region’s economy is expected to grow 4.3% this year, compared with ADB’s April forecast of 5.2%. The growth forecast for next year was also lowered to 4.9% from 5.3%, while the regional inflation forecast was raised.
However, excluding China, other developing countries in Asia are projected to grow by 5.3% in 2022 and 2023. This is affected by growth in South Asia and Southeast Asia, which are estimated to grow 6.5% and 5.1% respectively in 2022 and 2023.
Meanwhile, ADB noted that inflation in Asian developing countries was rising. The average inflation rate in the region rose to 5.3% in July from 3.0% in January.
“However, price pressures in developing Asia remain more moderate than in developed countries, including the United States and the euro area, and most developing countries,” ADB wrote in his latest report.
ADB warns that sustained increases in inflation this year have pushed regional central bank interest rates by 2.5 percentage points above the pre-pandemic average of 2015-2019, indicating an increasing deviation from higher price dynamics. normal.
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