The increase in global inflation has ‘threatened’ several countries in the world to enter an economic recession. The IMF (International Monetary Fund) projects that the inflation rate in 2022 for developed countries will reach 5.7% and for emerging countries at 8.7%. This number can be said to be quite high, but it is very rational with the existing conditions.
If you look back in time, many countries have passed through economic crises in the world. Countries that have experienced an economic crisis, have proven to survive to this day. For example, the Asian financial crisis in 1997, the global economic crisis in 2008, and the crisis during the ‘trade war’ of the United States and China in 2018.
Some analysts say that there will be a global recession in 2023 due to slow economic progress and inflation that continues to increase in 2022. One of the main factors for the recession is the number of workers who have been laid off, for example in the United States, more than 60,000 workers have been laid off. This number will increase over time.
However, world leaders have gone through several occasions before attending the G20 in Indonesia, stating that recession is not the only threat. The most feared thing from emerging countries is stagflation, this is a condition where economic growth decreases and unemployment rates increase massively. This will have an impact from all aspects, one of the impacts is an increase in the central bank’s benchmark interest rate.
‘Stagflation’ is more feared by every country because its effects will last a long time, where a country must prepare a long-term plan, in terms of monetary or fiscal simultaneously.