The Russia-Ukraine conflict, skyrocketing inflation, rising borrowing costs, and soaring crude oil prices are all contributing to the risk of a recession.
Many experts believe that the United States, the world’s largest economy, is on the verge of a recession.
A slight recession in the December quarter of this year is now more likely than not, according to a forecast by Nomura, given the decreasing growth momentum and the US Fed’s resolve to contain inflation.
A number of factors point to a tightening of financial conditions in the near future, including a considerable drop in consumer confidence, worsening energy and food supply disruptions, and a worsening prognosis for growth abroad. Analysts at Nomura believe that all of these factors will contribute to the projected decline.
Goldman Sachs economists now predict that the chances of the United States suffering a recession within the next year have increased from 15% to 30%. At least half a probability exists, according to Morgan Stanley CEO James Gorman, who spoke to Reuters.
The Indian economy could benefit from a US recession
A three-month slowdown in the price of crude oil has seen Brent crude oil trading at approximately $115, compared to its recent top of around $128.
Because of the aggressive tightening of monetary policy by central banks around the world, there has been a decline in crude oil prices. There were also lockdowns in China, which contributed to the price drop.
As a result of these reasons, demand for energy has decreased, which has led to a decrease in energy prices. This is good news for a country like India, which gets 80 percent of its crude oil from outside.
According to Manoj Dalmia, founder and director at Proficient Equities, “The recession might not be critical but a minor one which might see some increase of the unemployment rate, sluggish demand, falling markets and general drop in the prices of commodities which saw huge price appreciation recently.”