Although, India has been among the bright sparks in the global growth picture, It will battle inflationary pressures. Other emerging economies will confront growth challenges of their own
Global growth might be in for a rude shock. It seems too soon for this, of course; wasn’t the pandemic-induced recession just two years or so ago? Perhaps, but there are reasons to believe that some major economies are going through soft patches.
The most major concern is in the United States, where a number of forward-looking indicators—such as the Purchasing Managers’ Index, which captures producer sentiment—have flashed red for a while now. Momentum has visibly declined, as the Federal Reserve’s aggressive interest rate hikes have induced a slowdown in investment activity since the start of the year, while spending by the mighty American consumer has likewise pared back in recent months. The U.S. may yet escape a recession, but one of the most reliable signals of an impending recession—an inversion of the so-called yield curve, which occurs when the long-term interest rate falls below the shorter-term one—suggests that one could well occur in the second half of 2023. Real-time estimates of the state of the economy point to about 1 percent expansion in the last quarter of the year; positive still, but barely so.