Nomura: Many Major Economies To Enter Recession Within A Year

Many major economies will enter "multiple recessions" during the next 12 months as a result of tightening government policies and growing living costs, sending the global economy into a synchronized economic slowdown, Bloomberg News reported Nomura Holdings as saying on July 4, 2022.

Photo Insert: According to Nomura analysts, the eurozone, the United Kingdom, Japan, South Korea, Australia, and Canada are all expected to enter recession alongside the United States.

According to Nomura analysts Rob Subbaraman and Toh Si Ying in a research note, the eurozone, the United Kingdom, Japan, South Korea, Australia, and Canada are all expected to enter recession alongside the United States.

Still, central banks seeking to reestablish their reputation in terms of inflation control are likely to overtighten policy, even if it means sacrificing growth, before reducing rates in 2023, according to analysts.

"Increasing signs that the world economy is entering a synchronized growth slowdown, meaning countries can no longer rely on a rebound in exports for growth, have also prompted us to forecast multiple recessions," they wrote.

According to the paper, high inflation is likely to remain since pricing pressures have moved beyond commodities to services, leases, and wages.

The severity of the recession will differ by country. Nomura anticipates a five-quarter recession in the United States beginning in the fourth quarter of the current year. According to analysts, if Russia completely cuts off gas to Europe, the collapse in Europe might be far worse.

According to Nomura, the US and eurozone economies would decline by 1% in 2023. They warned that if interest rate hikes create housing busts, mid-sized economies such as Australia, Canada, and South Korea face deeper-than-expected recessions. South Korea is expected to take the biggest early hit, contracting by 2.2% in the third quarter of this year.

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