Press Release

Is a global recession coming? More experts are raising the alarm

In a survey released by the Switzerland-based World Economic Forum on Wednesday, seven out of 10 respondents in a sample of 22 leading private and public sector economists said they believed a global recession was at least somewhat likely in 2023.

Meanwhile, Ned Davis Research, a Florida-based research firm known for its Global Recession Probability Model, raised the likelihood of a global recession next year to 98.1 percent, the highest since the COVID-19 pandemic-related downturn of 2020 and the global financial crisis of 2008-2009.

While the war in Ukraine, China’s draconian pandemic policies, and runaway inflation are all clouding the economic outlook, investors are particularly concerned about the prospect of the United States Federal Reserve raising interest rates so aggressively that the world’s largest economy tips into recession — taking much of the rest of the world with it.

Historically, the US and other central banks have found it difficult to manage the task of raising rates — which raises the cost of borrowing and investment for businesses and households — without dealing a severe blow to economic growth. Past recessions, which are usually defined as two consecutive quarters of negative growth, have been blamed on the Fed’s efforts to cool high inflation, including back-to-back downturns in the early 1980s.

Critics, including renowned economists such as Jeremy Siegel, have accused the US Fed this time around of waiting too long to begin raising rates, only to resort to drastic hikes of late to make up for its prior inaction.