Chances of global recession nearing 50% -Citigroup

Reuters

Published Jun 23, 2022 06:23AM ET

Updated Jun 23, 2022 09:20AM ET

(Reuters) -Citigroup 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.

Recession is an "increasingly palpable risk" for the economy, Citigroup (NYSE:C) 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 recession as now approaching 50%," the analysts said.

Barclays (LON:BARC) weighed in on the current economic uncertainty on Thursday, saying it now expects growth of the developed economies to slow to 1% in 2023, and that the euro area could enter a recession from the fourth quarter of this fiscal year.

"Meanwhile, the U.S. economy is about to run headfirst into a Fed that seems committed to hiking to far above neutral; the ongoing collapse in new home sales is likely a harbinger of things to come," the brokerage said.

Barclays expects U.S. economic growth to slow to 1.1% in 2023, a stark come down from the 5.7% pace of 2021.

Several central banks, including the U.S. Federal Reserve, have aggressively raised borrowing rates as the cost of living reaches record levels.