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Recession is here: A look at what these global experts are saying

Recession is here: A look at what these global experts are saying

Recession is here: A look at what these global experts are saying
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By CNBCTV18.com Oct 12, 2022 8:35:36 AM IST (Updated)

Top global figures including the IMF, World Bank, and other financial institutions are expressing concern about economic outlook.

A murmur about a global recession had started early in the year, and now the warnings are growing louder by the day. While there are concerns that the United States may tip the global economy into a recession by the middle of the next year, experts believe major parts of the world are already in recession.

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US President Joe Biden has downplayed the risk of recession saying that possibility is very slight. He also added that Saudi Arabia will face action after OPEC decision for oil production cut.
Here is a look at the top 10 economic experts who have warned about a global recession.
JPMorgan Chase & Co. Chief Executive Officer Jamie Dimon
has warned that ‘serious’ headwinds will likely push the US and global economies into recession in the next 6-7 months by the middle of next year.
In an interview with CNBC, Dimon said, “I mean, Europe is already in recession and they’re likely to put the US in some kind of recession six to nine months from now.”
Despite the US economy doing well now, a number of indicators and global issues such as the impact of surging inflation, rising interest rates, the effects of the Federal Reserve ending quantitative easing and Russia’s war on Ukraine are ringing the alarm bells, Dimon said.
Former director of the US Congressional Budget Office, Dr Douglas Holtz-Eakin also expects a modest recession to hit by the middle of 2023. He believes that due to the Federal Reserve hiking rates, rising inflation and uncertainty ahead with China and with Russia’s war on Ukraine are the significant factors that can tip the US economy into recession.
“We’re going to see the Fed lean real hard on housing markets, it’s going to be a centrepiece of their efforts to tame inflation. So, will this cause a recession? Good chance of that,” said Holtz-Eakin during his keynote at the XChange Best of Breed 2022 conference, reported CRN News.
He also mentioned that it appears China is in recession currently, and there’s always the possibility of another new COVID-19 variant springing up, disrupting the economy further.
Billionaire hedge fund manager Paul Tudor Jones believes the US economy is either near or already in the middle of a recession.
“I don’t know whether it started now, or it started two months ago,” Jones said on CNBC’s ‘Squawk Box’.
According to the famed investor, as most recessions last about 300 days, he expects the economic turmoil to hit in the initial days. “The stock market is down, say, 10 percent. The first thing that will happen is short rates will stop going up and start going down before the stock market actually bottoms,” Jones said in the CNBC report.
He also said it is challenging for the Fed to bring inflation back to its 2 percent target.
Campbell R Harvey, a professor at Duke University’s Fuqua School of Business who pioneered the use of US bond market yields to predict recessions, has also said that the US Fed’s actions can “easily push the economy into recession and a recession would be very effective in reducing inflation,” in an Al Jazeera report.
Trinh Nguyen, a senior economist at Natixis who tracks emerging Asian countries in Hong Kong, believes Asian economies will not be spared from the economic fallout.
“We think Asian growth will decelerate. For economies more exposed to the trade cycle, the impact of weakening external demand will feel worse, such as South Korea and Taiwan,” Nguyen told Al Jazeera.
She believes that in emerging Asian countries, excluding China, the tightening of financial conditions will hinder investment and consumption is also expected to decelerate.
Jonathan Garner, chief Asia and emerging market strategist at Morgan Stanley argues that chances of a recession are already assured in China, Europe, and the US and the debate over if the recession will hit the global economy is over.
“This debate to some extent is over. We are in some kind of a global recession as of the third quarter,” Garner told Bloomberg.
Earlier in June, Morgan Stanley analysts predicted a recession to hit the Eurozone by the end of this year.
IMF Managing Director Kristalina Georgieva has warned that the US labour market is losing momentum because of the impact of higher borrowing costs during the IMF and World Bank’s annual meeting, Bloomberg reported. She added that the Eurozone is slowing as natural gas prices soar, the same as China's due to Covid-19 disruptions and volatility in the housing sector.
The IMF has forecast that about one-third of the world economy will have at least two consecutive quarters of contraction this year and next, with a lost output $4 trillion through 2026.
World Bank President David Malpass also warned that there’s a “real danger” of a worldwide contraction and the US dollar is weakening the strength of currencies of developing nations, increasing their debt to ‘burdensome’ levels.
Noted economist Nouriel Roubini, who correctly predicted the financial crisis in 2008, feels that the US and the rest of the world are on the brink of a long recession.
Roubini warns that recession will trip the global markets down as debt levels worldwide rise, and it will be impossible for the US Fed to keep inflation down to 2 percent.
Credit rating agency Fitch has also warned that the UK is facing a deeper recession than previously forecast.
The agency cut the outlook on the UK to ‘negative’ and has predicted that the UK GDP will shrink by 1 percent in 2023, following the “extreme volatility in UK financial markets and the prospect of sharply higher interest rates,” the Guardian reported.
According to a KPMG survey of 400 leaders of large US companies, a whopping 91 percent of leaders are predicting a recession in the next 12 months. This means more than eight out of 10 CEOs anticipate a recession in the US.
Paul Knopp, chairman and CEO of KPMG US, said, “There has been tremendous uncertainty over the past two and a half years, and now, we have another looming recession,” Al Jazeera reported.
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