Financial institution Nomura Holdings Inc expects most major economies to experience a recession next year a string of tightening central and government policies as well as rising cost of living.
It will indirectly see the global economy will experience a slowdown in growth simultaneously.
The notes of Rob Subbaraman and Si Ying Toh of Nomura explain that the European zone, United Kingdom (UK), South Korea, Australia and Canada will experience a simultaneous recession with the United States (US).
And the central bank’s efforts in controlling inflation will see too much policy tightening even if such action will sacrifice growth before rate cuts in 2023.
The note also underlined that inflation will remain high with price pressures will spread to goods services, wages and beyond commodities.
Even so, the extent of the economic downturn varies by country with Nomura projecting a small but long recession for 5 quarters starting the last quarter of this year.
It is predicted that economies in the US and the European zone, exacerbated by the Russian issue, will contract 1% by 2023 while middle -income countries such as Australia, Canada and South Korea will face a deeper recession.
It is understood South Korea is seen to be receiving the worst initial impact with a 2.2% contraction in the third quarter of this year while Japan predicts the most moderate recession as a result of continued policy support and economic reopening.
As for China's economic giant, the accommodative policy launched is expected to support the country's growth despite the risk of a new lockdown.
