Is a global recession coming and what does that mean?
As the global economy recovers from a historic recession brought on by the COVID-19 pandemic, concerns are already being raised about the next downturn.
These add to an already turbulent backdrop of global inflationary pressures amid rising energy prices and frayed supply chains caused by the pandemic.
Inflation will remain high. Central banks in the developed countries are tightening their monetary policies, raising interest rates.
Contributing to this is a gloomy mix of uncertainties, including the ongoing war in Ukraine, COVID-19 flare-ups in China that have led to crippling lockdowns and central banks, in particular the US Federal Reserve, stepping on the monetary tightening pedal.
Employers across the economy have complained of difficulty recruiting staff at the salaries they are willing to pay, and airlines are struggling to meet the increased demand as international travel restarts in earnest after Covid-19 lockdowns.
Emerging market stocks have dropped to their lowest in 22 months, hit by the strong dollar and fears of a global slowdown.
China's yuan has dropped to a near 19-month low against the US dollar.
The real danger comes when business and consumer confidence start taking a hit.
This spiral down in economic activities is when things start to get serious.
This is where we may see the start of slower growth. Whether it becomes a recession will very much depend on the pace of the deceleration in growth momentum.
Another example is the impact of rising interest rates.
After rebounding from the short-lived pandemic recession, the U.S. economy has faced multiple threats in 2022, sparking investor fears of a prolonged downturn.
Annual inflation reached a 40-year high in March, prompting the Federal Reserve to raise its benchmark rate by half a percentage point, the biggest hike in two decades. That's on top of months of stock market volatility.
Always make sure that you have sufficient emergency savings.
With extra savings, there's more time to strategize your next move, rather than feeling pressure.
If you have enough in liquid emergency savings, you are providing yourself with more options.
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