CNN Warns Interest Rates Will Spur Global Recession

The global economy has endured a tough year, with decades-high inflation sapping post-lockdown spending and pushing central banks to hike borrowing costs at an unprecedented clip to bring it under control, Julia Horowitz reported for CNN.

Photo Insert: Global growth is seen to fall to 2.7% in 2023.

Their campaign to manage prices may be working — but potentially at a sizable cost in 2023.

“It is likely that the world economy will face recession next year as a result of the rises in interest rates in response to higher inflation,” Kay Daniel Neufeld, director and head of forecasting at the Center for Economics and Business Research, said this week.

Not everyone agrees the global economy is heading for a recession. Yet with growth expected to slip even lower after a sharp slowdown in 2022, it’s a possibility. The International Monetary Fund (IMF) projected in October that global growth will fall to 2.7% in 2023.

Excluding the global financial crisis and the worst stage of the pandemic, that would be the weakest year for the world economy since 2001.

In November, the group warned the outlook had turned even “gloomier” since it published that forecast. Whether a global recession materializes may come down to three factors: What central banks do next, the consequences of China’s nascent reopening and energy prices.

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