Because of persistently high inflation, exorbitant energy prices, and rising interest rates, policymakers throughout the world are worried that the global economic downturn could worsen into a prolonged period of stagnation.
According to the Middle East News Agency, the American publication “Wall Street Journal” stated that the Federal Reserve is likely to delay hiking interest rates due to the poor US inflation data.
She continued by saying that this might encourage the US currency to strengthen, which would raise the price of imports and the burden of many nations’ debt servicing.
The biggest energy producers are reducing their output, which raises price pressures and slows economic growth, particularly in Europe.
Another indication of the slowdown in economic growth was the steep decline in consumer expenditure, according to recent data from China.
Many political makers in meetings believe that high inflation in the United States and the response of the Federal Reserve represent a major threat to their economic prospects.
The American newspaper claimed that this year’s sharp increases in the federal interest rate helped draw investors to the American markets and increased the value of the dollar, noting that the dollar’s strength drives up the price of imports and serves to service the debt owed to many other nations.
In order to safeguard their currencies, it also puts pressure on other central banks to boost interest rates, which might hamper economic development.
There is no formal definition of global stagnation, the newspaper noted, but many economists believe that one of its fundamental components is the decline in economic growth below population growth, or roughly 1. 1%, while the World Bank anticipates 1. 9% worldwide growth for the coming year.
Source: The American newspaper “Wall Street Journal”.
American newspaper: The world’s economy is expecting high inflation.
About Author
