World Faces A Recession In 2023, Says Researcher: 'The Battle Against Inflation Is Not Won Yet'

The global economy breached $100 trillion for the first time in 2022 but will stall in 2023 in the backdrop of policymakers continuing their fight against inflation, according to the Centre for Economics and Business Research.

What Happened: The world faces a recession in 2023 as higher borrowing costs targeted at tackling inflation cause a number of economies to contract, reported Bloomberg, citing the British consultancy.

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“It’s likely that the world economy will face a recession next year as a result of the rises in interest rates in response to higher inflation,” said Kay Daniel Neufeld, director and head of Forecasting at CEBR.

“The battle against inflation is not won yet. We expect central bankers to stick to their guns in 2023 despite the economic costs. The cost of bringing inflation down to more comfortable levels is a poorer growth outlook for a number of years to come,” the report added.

Recession Fears: In line with the consultancy’s stance, the market remains awash with expectations of a recession while hopes of a soft landing have started losing momentum. Prominent names have argued in recent times that a recession may be inevitable.

The SPDR S&P 500 ETF Trust SPY lost 0.15% in the last five days while the Vanguard Total Bond Market Index Fund ETF BND shed 1.19% in the same period.

The findings by the consultancy are more pessimistic than the latest forecast from the International Monetary Fund, according to the Bloomberg report. That institution cautioned in October that over a third of the world economy will contract and there is a 25% chance of global GDP growing by less than 2% in 2023, which it defines as a global recession.

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