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Other key economies are at high risk, and the US faces a 40% chance of a recession: Report

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Other key economies are at high risk, and the US faces a 40% chance of a recession: Report

According to Reuters surveys of analysts, several significant economies are at a high risk of a recession, and the global economy suffers from a significant slowdown.

According to Reuters surveys of analysts, the global economy is experiencing a severe slowdown, with several essential economies facing a great danger of recession and only a limited amount of substantial inflation cooling over the coming year.

As many policymakers make up for a collective mistake in judgment last year when they believed supply chain-related inflation pressures would not continue, most central banks are barely halfway through a still-urgent cycle of interest rate increases.

Another risk arises from central banks acting prematurely without giving themselves enough time to examine the effects of the quickest interest rate increases in more than a generation following a decade of near-zero rates.

Despite their forceful response—in some cases, the greatest in recent decades—inflation has not yet decreased in most of the near-50 economies included by the Reuters polls of more than 500 forecasters conducted from June 27 to July 25.

A prime example is the US Federal Reserve, which will raise interest rates by an additional 75 basis points later on Wednesday. There, inflation is at a four-decade high of 9.1% and is not anticipated to fall to the Fed’s objective of 2% until at least 2024.

Rising inflation has caused a severe crisis in the cost of living throughout most of the globe, increasing the likelihood of a recession.

The likelihood of a recession in the biggest economy in the world occurring in the upcoming year has already increased from 3 months ago to a median 40% likelihood. These risks have also increased for the eurozone and Britain.

“In our forecast, recessionary forces are becoming more pronounced. Notably, the United States and the euro area are two large economies that are now in the process of entering a recession. Although these downturns can occur at different times and are anticipated to be moderate, “Nathan Sheets, Citi’s top global economist, made a statement.

“The global economy is weakening, and the outlook is dismal by all measures. Unquestionably, a clear and present risk is the global recession.”

The projection for global growth has been revised downward from 3.5 percent and 3.4 percent in the most recent quarterly survey, conducted in April, to 3.0 percent this year and 2.80 percent the following year. That contrasts with the most recent projections of 3.2% and 2.9% from the International Monetary Fund.

Only 13% of the 48 economies studied had their growth predictions for the next year kept intact, and 10% had their predictions enhanced.

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