Is a Global Recession Imminent?
Global growth prospects have deteriorated significantly since the beginning of the year, raising the specter of global recession. This paper relies on insights gleaned from previous global recessions to analyze the recent evolution of economic acti...
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| Format: | Policy Note |
| Language: | English en_US |
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World Bank, Washington, DC
2022
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| Online Access: | http://documents.worldbank.org/curated/en/099031409142266105/IDU01ed08ada0dcb1048f809c390d3ba1acab4e2 http://hdl.handle.net/10986/38019 |
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okr-10986-380192022-09-16T05:10:36Z Is a Global Recession Imminent? Guénette, Justin Damien Kose, M.Ayhan Sugawara, Naotaka GLOBAL RECESSION GLOBAL ACTIVITY GROWTH FORECASTS POLICY RESPONSES GLOBAL BUSINESS CYCLE Global growth prospects have deteriorated significantly since the beginning of the year, raising the specter of global recession. This paper relies on insights gleaned from previous global recessions to analyze the recent evolution of economic activity and policies and presents plausible scenarios for the global economy in 2022–24. We report three major findings. First, every global recession since 1970 was preceded by a significant weakening of global growth in the previous year, as has happened recently. Second, the global economy is in the midst of one of the most internationally synchronous episodes of monetary and fiscal policy tightening of the past five decades. The policy actions in many countries are necessary to contain inflationary pressures, but their mutually compounding effects could have larger impacts than envisioned—both in tightening financial conditions and in steepening the global growth slowdown. Third, if the degree of global monetary policy tightening markets now expect is not enough to reduce inflation to targets, experience from previous global recessions suggests that the additional tightening needed could cause significant financial stress and increase the likelihood of a global recession next year. These findings imply that policymakers need to carefully calibrate, clearly communicate, and credibly implement their policy actions while considering potential international spillovers, especially given the globally synchronous withdrawal of monetary and fiscal policies. They also need to pursue supply-side measures to overcome constraints confronting labor markets, energy markets, and trade networks. 2022-09-15T13:43:19Z 2022-09-15T13:43:19Z 2022-09 Policy Note http://documents.worldbank.org/curated/en/099031409142266105/IDU01ed08ada0dcb1048f809c390d3ba1acab4e2 http://hdl.handle.net/10986/38019 English en_US EFI Policy Note;No.4 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo World Bank World Bank, Washington, DC Working Papers Working Papers :: Other Papers World |
| repository_type |
Digital Repository |
| institution_category |
Foreign Institution |
| institution |
Digital Repositories |
| building |
World Bank Open Knowledge Repository |
| collection |
World Bank |
| language |
English en_US |
| topic |
GLOBAL RECESSION GLOBAL ACTIVITY GROWTH FORECASTS POLICY RESPONSES GLOBAL BUSINESS CYCLE |
| spellingShingle |
GLOBAL RECESSION GLOBAL ACTIVITY GROWTH FORECASTS POLICY RESPONSES GLOBAL BUSINESS CYCLE Guénette, Justin Damien Kose, M.Ayhan Sugawara, Naotaka Is a Global Recession Imminent? |
| geographic_facet |
World |
| relation |
EFI Policy Note;No.4 |
| description |
Global growth prospects have
deteriorated significantly since the beginning of the year,
raising the specter of global recession. This paper relies
on insights gleaned from previous global recessions to
analyze the recent evolution of economic activity and
policies and presents plausible scenarios for the global
economy in 2022–24. We report three major findings. First,
every global recession since 1970 was preceded by a
significant weakening of global growth in the previous year,
as has happened recently. Second, the global economy is in
the midst of one of the most internationally synchronous
episodes of monetary and fiscal policy tightening of the
past five decades. The policy actions in many countries are
necessary to contain inflationary pressures, but their
mutually compounding effects could have larger impacts than
envisioned—both in tightening financial conditions and in
steepening the global growth slowdown. Third, if the degree
of global monetary policy tightening markets now expect is
not enough to reduce inflation to targets, experience from
previous global recessions suggests that the additional
tightening needed could cause significant financial stress
and increase the likelihood of a global recession next year.
These findings imply that policymakers need to carefully
calibrate, clearly communicate, and credibly implement their
policy actions while considering potential international
spillovers, especially given the globally synchronous
withdrawal of monetary and fiscal policies. They also need
to pursue supply-side measures to overcome constraints
confronting labor markets, energy markets, and trade networks. |
| format |
Policy Note |
| author |
Guénette, Justin Damien Kose, M.Ayhan Sugawara, Naotaka |
| author_facet |
Guénette, Justin Damien Kose, M.Ayhan Sugawara, Naotaka |
| author_sort |
Guénette, Justin Damien |
| title |
Is a Global Recession Imminent? |
| title_short |
Is a Global Recession Imminent? |
| title_full |
Is a Global Recession Imminent? |
| title_fullStr |
Is a Global Recession Imminent? |
| title_full_unstemmed |
Is a Global Recession Imminent? |
| title_sort |
is a global recession imminent? |
| publisher |
World Bank, Washington, DC |
| publishDate |
2022 |
| url |
http://documents.worldbank.org/curated/en/099031409142266105/IDU01ed08ada0dcb1048f809c390d3ba1acab4e2 http://hdl.handle.net/10986/38019 |
| _version_ |
1764488326224543744 |