Key Takeaways:
- The World Bank is concerned about a global recession in 2023.
- Major companies experiencing unexpected slowdowns.
- Central banks need coordinated efforts to keep core inflation under control.
The World Bank has expressed concerns about a global recession in 2023 over concerns about central banks’ rate hike policies around the globe.
The intention behind raising lending rates is to bring down soaring inflation. But what happens along with that is borrowing costs more for consumers. That is because people borrow less because of costlier loans, leading to a slowdown in economic growth.
When this formula occurs, things become rather dicey. There is a fine line between increasing costs and a growing healthy economy.
The World Bank says:
“The global economy was in its steepest slowdown following a post-recession recovery since 1970. The world’s three largest economies – the US, China, and the Eurozone have been slowing sharply. Under the circumstances, even a moderate hit to the global economy over the next year could tip it into recession.”
Delivery Companies Troubled Times
Stock shares of a few major delivery companies are all down.
Last week, FedEx warned investors that the Asia and European markets are experiencing unexpected slowdowns; revenues will be hundreds of millions of dollars less than recent forecasts projected. Amazon, Deutsche Post, and Royal Mail also experienced investor sell-offs.
FedEx regrettably announced they will close dozens of yet unnamed offices due to the drop in demand and revenue – shares dropped 20% after the announcement.
Out of an abundance of deep concern, the World Bank called on central banks to coordinate their decisions and communicate clearly to “reduce the degree of tightening needed.”
A word of advice from the World Bank
It is not common for central banks to run policy decisions together. The World Bank is asking that extra precautions take place with the efforts needed to, in effect, help the world.
Investors feel that central banks will raise global monetary policy rates near four percent next year to keep core inflation under control – four percent is double the desired two percent level.
The number of countries fighting recession concerns at the same time is at its highest level since the early 1990s. The global economy is in the steepest slowdown following a post-recession recovery since 1970.
Policymakers need viable fiscal plans to provide targeted relief for at-risk households.
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