In a recent interview with CNBC, Robert Subbaraman, chief economist and head of global macro research at brokerage firm Nomura Holdings, forecast a global recession impacting several major economies – including South Korea, Australia and Canada – by the end of 2023.
Earlier today (July 6), International Monetary Fund Managing Director Kristalina Georgieva said the outlook for the global economy had “darkened significantly” since April and that she could not rule out a possible global recession next year, given the elevated risks.
With the concerns of these economists in mind, Our Today presents a brief guide to what to expect with a recession.
What is a recession?
A recession occurs when a country experiences negative economic growth for at least two financial quarters that can vary in severity. Some degree of negative growth globally is expected primarily due to repercussions from the COVID-19 pandemic in what is called an economic contraction.
What is the cause for concern?
Causes for concern are the fact that this will be experienced by all major economies concurrently, which means global demand for exports will be affected and its currently unknown for how long this negative growth will persist.
What’s causing this recession?
The COVID-19 pandemic is responsible for approximately 6.5 million deaths globally and caused disruptions in workflow. Many countries allocated, borrowed or printed more money to implement social safety nets and other methods of sustaining their economies throughout the pandemic (aid programmes, stimulus cheques, tax breaks).
In addition, inflation is rising sharply worldwide due to shortages stemming from supply chain issues and the Russia-Ukraine war.
How does this affect us in the Caribbean?
Most of the Caribbean islands, such as Jamaica, Barbados and the Organisation of Eastern Caribbean States are tourist dependant. Although Jamaica is predicting a rise in travel numbers this year, inflation and rising interest rates and the overall reduction in global travel have heavily impacted the regional economy.
If numbers continue to remain low, as predicted without adjustments being made to our current economic policies and practices, then economic growth will falter.