It is only the fourth day since the start of the New Year, when the world stepped in with expectations. People of the world welcome every year with expectations. But alarming warnings are coming out from global financial organizations and rating agencies that the new year could be one of a major recession. A report in this regard by the Center for Economics and Business Research (CEBR) was released on December 22. CEBR presented its concerns to the world through research that combined existing conditions and conclusions about the future economy. The CEBR report points out that many countries globally are facing inflation and new borrowing will be necessary to overcome it, which will lead to a crisis in the economies. After this, the forecast of the International Monetary Fund (IMF) has been released on January 2. The IMF had already assessed last October that the world economy is facing a major crisis. At that time, the IMF had predicted that there would be a fall in the global GDP rate of two percent. But their warning the other day is worrying the whole world. IMF chief Kristalina Georgieva has said that one-third of the world’s economies, including large countries, will face economic recession this year.
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The head of the IMF pointed out the main reasons for the recession are the covid epidemic, the ongoing Ukraine-Russia war, the fuel crisis and the price hikes that have gripped many countries of the world due to these. Even giants like the US, China and the European Union, which are described as the main drivers of the world economy, will face a recession. Wall Street conclusions have also emerged. Their main warning is that they will face an unprecedented recession. This warning is given by multiple organizations on Wall Street, which is now known as the financial center of not only the US but also the world. Barclays Capital has concluded that 2023 will be the worst year for the global economy in four decades. The Ned Davis Research Institute predicts a 65 percent chance of a global recession. Fidelity International was of the opinion that reaching a difficult situation was inevitable. One thing that is mentioned in the IMF chief’s warning is noteworthy. A third of the world’s economy is expected to be in recession, but even in countries that are not in recession, billions of people will feel the pinch.
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Before this, the world faced a serious recession in 2007. We have seen the economic structures, including the US, which many pretended to be the great powers of the world and have a strong foundation, from the grip of the recession that lasted until 2009. But at that time, our country survived the global recession because of the strong public sector presence that existed here. Public sector banks and enterprises, including in the insurance sector, were hailed as tools to prevent collapse. It was a period when the neo-liberalization policies had begun to be vigorously implemented, but the public sector was not completely sold off. Therefore, the proponents of liberalizing economic policies faced a lot of opposition. The necessity of the public sector was once again realized. But today the situation has changed. In the 13 years since 2009, the country’s public sector has become increasingly weak. Public sector banks, other financial institutions and insurance enterprises, which contributed to the containment of the global recession, were increasingly privatized. Sale of public sector enterprises is seen as an easy way of raising funds and special schemes are being devised to dispose of even the few remaining enterprises. In this new situation, it will be impossible for our country to sustain even if recession does not directly affect it. The real implication of the IMF chief’s comment that billions of people will feel the recession even in countries unaffected by the recession is that India needs to worry too.