In the face of rising inflation after the coronavirus epidemic and the Russia-Ukraine war, most central banks, which see interest as a medicine, went to aggressive interest rate increases. Now, these interest rate hikes are about to expose the world to a deep recession crisis. Unlike most countries, Turkey focused on growth in this process and chose to cut interest rates.
Hard days are coming
Jamie Dimon, CEO of JP Morgan, stated that the US economy and the global economy are likely to enter recession by the middle of next year.
Dimon said that the rapidly rising interest rates, increasing inflation, the Russia-Ukraine war, the unknown potentials of the Fed’s monetary policies are indicators of Recession.
Stating that the result of these interactions may create a recession for the US and the world economy, Dimon noted that Europe is currently in recession, and that the US economy may enter recession 6-9 months later.
“There will be a big drop in the S&P 500”
Stating that the S&P 500 index may decrease by 20 percent, Dimon said, “This 20 percent drop is likely to be much more painful than the first 20 percent drop.”
Recession warnings in a row
IMF Managing Director Kristalina Georgieva and World Bank President David Malpass made assessments on the global economy at the virtual event held for the start of the annual meeting of the two institutions. IMF Managing Director Georgieva stated that high interest rates have started to affect growth negatively.
$4 trillion loss
The IMF expects approximately one-third of the world economy to contract for at least two consecutive quarters this year and next year, with a production loss of $4 trillion by 2026.
Stating that they cannot accept the ‘derailment’ of inflation, the IMF President argued that strong action should be taken despite the risk of recession.
Stating that emerging economies are struggling due to tightening policies, Georgieva said, “If we act together, we can prevent the difficulties we will face in 2023.”
World Bank President Malpass also stated that the global contraction next year is a “real threat”, that the strengthening of the dollar causes depreciation in the currencies of developing countries and that the debt levels of these countries are very high.
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