World Economy Headed Towards Recession In 2023, Reveals Report; Know What It Means For India

The soaring prices and rising lending rates worldwide due to specific geo-political issues have negatively impacted the world economy. A report published by the Centre for Economics and Business Research (CEBR) highlights that the world is heading toward recession in 2023, affecting all developed and developing economies.

In the yearly World Economic League Table, the British consultancy mentioned that the world economy passed $100 trillion in 2022 for the first time. Still, the upcoming year will witness policymakers fighting against rising inflation.

The director and head of Forecasting at CEBR, Kay Daniel Neufield, mentioned, "It's likely that the world economy will face a recession next year as a result of the rises in interest rates in response to higher inflation," reported Business Today.

Policymakers Need Steady Hands

The findings on world economic status by CEBR is not the first sign of storm clouds. Earlier this year, the International Monetary Fund (IMF) warned that more than a third of the global economy would contract, and 25 per cent chances of world GDP growing by less than 2 per cent in 2023 would be present, which will create a global recession.

The major contributor to the adverse situation is inflation and high lending rates. According to the report, national banks must function in the national interest despite economic losses to overcome economic challenges.

India's Key Sectors Ready To Face Recession?

India has so far managed to shield its economy from external shocks, but some sector remains the primary target. The IT sector of the country last fiscal year reaped $227 billion in revenue amid a rise in global technology spending. The domestic market players also contributed to the revenue, which touched a record-high mark, a report by the National Association of Software and Services Companies (Nasscom) suggests.

However, the Indian IT industry is massively dependent on clients and investments in Europe and North America. As the IMF and CEBR reports have suggested, these markets will go into recession, impacting the Indian IT industry as well.

Another primary driver of the Indian economy, the food, and energy sector, which directly affects millions of lives, has already seen dramatic rises this year. While the food price index in 2022 rose to a lifetime high at 146.94, the crude oil prices a barrel averaged $102.14 this year.

However, both sectors are massively dependent on the West for their imports, and a slide in the global economy towards recession can hit it hard, affecting almost all the sectors of India as food and energy products drive the entire economy.

Despite all odds, the CBER report has highlighted that India's economy will bolster in the coming decade. The research mentions that India will become the third $10 trillion economy by 2035 and the world's third-largest economy by 2032 if the focus on key sectors remains the same.

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