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Citi sees chances of global recession nearing 50% due to Ukraine war, Covid

Recession is an 'increasingly palpable risk' for the economy, Citigroup analysts wrote in a note on Wednesday

Citigroup | Recession



is forecasting a near 50% probability of a global recession, as central banks rush to raise interest rates to stamp out inflation that has been partly fueled by the impact of the Ukraine war and the COVID-19 pandemic.

is an "increasingly palpable risk" for the economy, analysts wrote in a note on Wednesday, while assessing the likely trajectory for global growth over the next 18 months.

"The experience of history indicates that disinflation often carries meaningful costs for growth, and we see the aggregate probability of as now approaching 50%," the analysts said.

Several central banks, including the U.S. Federal Reserve, have aggressively raised borrowing rates as the cost of living reaches record levels. Fed Chair Jerome Powell said on Wednesday the central bank was not trying to trigger recession, but it was committed to bring prices under control.

"The global economy is flashing a number of yellow lights at present, which flow from the persistent supply shocks but also increasingly from central bank tightening and the effects of tighter financial conditions and higher inflation on the behavior of consumers," said.

It said that while risks were higher, all three scenarios of a "soft landing, higher inflation, and global recession (were) plausible and should remain on our radar," with something closer to a soft landing as its base case.

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

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First Published: Thu, June 23 2022. 15:53 IST