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Why a global recession is unlikely

By Koichi Hamada

06 Sep 2023 · 3 min read

informed Summary

  1. Earlier this year, many predicted a global recession, but as of mid-2023, only China seems to be at risk of a prolonged economic slump. Stock markets are thriving in New York, London, Europe, and Tokyo, Koichi Hamada notes.

NEW HAVEN – Earlier this year, predictions that a recession would soon grip the global economy were rampant. But, more than halfway through 2023, China is the only major economy that appears to be at significant risk of a prolonged slump. In New York and London, and across Europe, stock markets are soaring. In Tokyo, the Nikkei hit a 33-year high in June. While some economies are struggling, a global recession now appears highly unlikely.

An economic downturn can have many causes. For example, excessive consumer and investor confidence or very high levels of public spending can drive up aggregate demand to the point that inflation begins to rise, forcing policymakers, especially central banks, to intervene to cool an overheating economy. If they overdo it – say, by raising interest rates, and thus borrowing costs, too aggressively – they can push the economy into recession.

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