- Concerns over a potential economic downturn are sure to rise in light of these figures.
- According to the World Bank, a severe recession in the global economy is possible.
The GDP in the UK has contracted by 0.3%, which is a surprising result. The Office of National Statistics’ monthly estimates show a monthly decline of -0.3% in August. Growth in GDP was predicted to slow to 0% month-over-month. A greater amount of people are worried about a recession since GDP has been lower than predicted.
The GDP increased by 0.1% in July. Both output and manufacturing figures indicated negative trends, with production falling by 1.6% and manufacturing by 1.8%, respectively. Concerns over a potential economic downturn are sure to rise in light of these figures.
Global Recession Around the Corner
The status of the global economy today is precarious, to say the least. High inflation has prompted central banks in major economies to take action, including raising interest rates and reducing their quantitative easing programs. The US Federal Reserve, for instance, has increased interest rates four times in a row by a total of 75 basis points (bps). It’s also quite probable that we’ll see a fifth rate increase of 75 basis points. When faced with rising inflation, the Bank of England did the same thing and raised interest rates.
But the central banks’ hawkish attitude has made the world’s economy more unstable. According to the World Bank, a severe recession in the global economy is possible in the year 2023.
There have been other notable problems associated with the tight monetary policy. Elon Musk, the wealthiest man in the world, says the Federal Reserve’s aggressive attitude would cause deflation. Ark Invests’ Cathie Wood has issued an open letter to the Fed in which she expresses sympathy for Musk’s position.
Two straight quarters of decline in the US economy have occurred. In technical terms, this does indicate a downturn. The US government, though, has rejected the notion of a recession.