GLASGOW, SCOTLAND, October 07, 2022 /24-7PressRelease/ — War between Russia and Ukraine might have a lasting impact on world economies.
Glenbrook Advisory in Scotland, has reduced its prediction for global growth and increased its projection for inflation, warning that the effects of war could deepen.
According to Glenbrook, the war in Ukraine would cost the global economy a “hefty price” in terms of slower growth, higher inflation, and possibly permanent harm to supply networks.
Since predictions made public last month, Glenbrook reduced its outlook for global GDP this year from 4.5% to 3% and quadrupled its inflation projection to roughly 9% for 38 member countries. It anticipates a 2.8% growth rate in 2023.
They cautioned that the cost of war may be “much higher,” listing a long list of concerns from a sudden cutoff of Russian supply in Europe to weaknesses on the financial markets brought on by high debt and high asset values.
The Advisory company stated in its economic outlook that “there have been numerous important changes in the global economic landscape in recent months, including the worldwide adoption of the Omicron form of Covid and the greater-than-expected persistence of inflationary pressures.” “The economic effects of the war in Ukraine, however, are the single greatest change.”
The bleak assessment, which is consistent with a similar warning from the World Bank, suggests that Russia’s invasion will have a wider and deeper economic impact, making it more difficult to implement the proper fiscal and monetary policies.
The US Federal Reserve, for instance, just increased interest rates at a sped-up pace of 50 basis points last month as a result of the early consequences of increasing prices, which have already compelled central banks to tighten monetary policy.
In the meanwhile, governments are revising their spending plans in an effort to protect households.
All monetary authorities should reduce stimulus, according to Glenbrook, but it is especially important to exercise prudence in the euro region, where rising prices mostly reflect supply pressures.
The company noted that “central banks will have to execute a careful balancing act between continuing the post-pandemic economic recovery and keeping inflation under control, especially where the recovery is not yet fully achieved.”
According to Glenbrook, inflation is affecting living standards and lowering consumer expenditure globally.
Here are some further report highlights:
Due to its economies’ struggles to wean themselves off on Russian fuel, Europe is one of the regions most at danger if the conflict in Ukraine continues or intensifies.
The rising cost of essential commodities like food and electricity puts low-income economies in danger.
Sharp rate increases may cause growth to decline more than anticipated
The impact of China’s Covid Zero policy on the world situation is still present.
They also makes the following suggestions:
To prevent a food catastrophe, more assistance is needed, as well as international coordination on logistics.
Have targeted government assistance for families most affected by rising living costs
central banks’ hints that they won’t permit the inflation to spread
The US can tighten monetary policy more quickly as prices rise due to excessive demand.
Signals from central banks they won’t allow inflation to spread
• US monetary policy can tighten faster as prices driven by over-buoyant demand
• More solidarity in Europe on defense and energy spending
• Keep trade open to ensure diverse value chains for the green transition
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