“Imminent” Global Recession: Some Reflections

The global economy has already experienced recession in 1975, 1982, 1991, 2007 (the Great Recession or the Global Financial Meltdown), and 2020 (The Pandemic Recession). When hope of recovery has just started to emerge with real gross domestic product (GDP) growth reaching 5.7% in 2021, dark clouds are gathering ominously on the horizon again. In January 2022, the World Bank's forecasts (for global growth) were 4.1% for 2022 and 3.3% for 2023. Not only the indicators like industrial activity are shrinking, consumer and investor confidence is at a low point, workers are losing jobs, profit margins and global trade are showing a downward trend, after a period of post-pandemic expansion. But most worrying is the slowing down of the Big Trio of USA-China-Euro Zone that currently accounts for over 50% of real global GDP in Purchasing Power Parity (PPP) terms and contributed 62% to global growth over 2015–2019. Moreover, energy and food prices are showing rising trend, and Ukraine war is showing no sign of ending in the near future. In this context, the present chapter attempts to analyze whether with prices rising and productive activities (including trade) shrinking (described as “stagflation”), is the world headed for another serious slump, and if that happens, what will be its severity? It also tries to point out some limitations of the policy suggestions of the structural projection models used by the World Bank. It also tries to point out the policy suggestions of the models used by the World Bank.