The probability of the global economy succumbing to recession is close to 50% as central banks tighten monetary policy and demand for goods weakens, according to Citigroup economists.
Economists led by Nathan Sheets said in a report on Wednesday that supply shocks continue to push up inflation and reduce growth, while central banks are now aggressively raising interest rates and consumer demand for goods is diminishing.
The economists wrote: “The experience of history indicates that reversing inflation often has meaningful costs for growth, and we see the overall probability of recession now approaching 50%.”
According to economists, this comes amid supply chain problems that exacerbate inflation and continue to pressure growth rates.
But Citigroup has so far forecast global economic growth of 3% this year and 2.8% in 2023.