While central banks continue to struggle in their efforts to curb inflation, economists and families around the world are feeling uncertain about the future.

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This week alone, all three major US stock indexes entered a bear market, while inflation in Germany hit a 70-year high. On Wednesday, the Bank of England announced unprecedented emergency measures to bolster the UK bond market.

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And as global economic sentiment plummets, International Monetary Fund (IMF) officials are warning of more difficult times ahead.

“We expect some countries to face a recession in ’23,” IMF spokesman Gerry Rice told reporters on Thursday. “It is too early to say whether this will be a widespread global recession.”

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His comments served to augment the comments he had made two weeks earlier.

“Even if some countries are not technically in recession and they are still in positive growth,” Rice said, “for many people around the world, it will feel like a recession.”

Global production slowed during the second quarter of this year due to high inflation in the United States and Europe, a slowdown in China amid the COVID-19 outbreak and negative spillovers ahead of the war in Ukraine.

The effects of this slowdown are even more severe in developing countries, as price exchange rates, higher commodity prices and lower crop yields from the effects of climate change have eroded the profit margins of local businesses and entrepreneurs.

Taking these factors into account, the IMF lowered its global growth expectations to 3.2% in 2022 and 2.9% in 2023 – a drop of 0.4 and 0.7 percentage points, respectively, from earlier estimates.

Set to release an updated outlook in early October, representatives of the organization predict the economic situation will continue to “tighten” in the short term.

“Clearly, what we characterized as a global economic slowdown has only intensified in recent weeks and months,” Rice said.

He later said that the rising US dollar was putting additional pressure on the global economy.

The US dollar index, which tracks the dollar against a basket of other foreign currencies, gained 16.9% year over year on track for record gains. When weighed against the dollar, the British pound, Chinese yuan and euro have reached lows not seen in decades.

Much of this is due to the actions of the US Central Bank.

As part of its domestic fight against inflation, the US Federal Reserve has aggressively raised interest rates, making it more expensive to borrow the world’s reserve currency. In turn, this has driven the dollar’s value up to levels not seen in 20 years.

While a higher US dollar is good for US importers and travelers, Morgan Stanley’s chief US equity strategist Michael Wilson told Bloomberg on Tuesday that similar increases by the world’s reserve currency have historically caused financial or economic crises. .

“The dollar is at a point where it’s causing real stress in the real economy, mostly outside the US,” he said. “Emerging markets have been terrifying; in some other sectors, apart from higher commodity prices, the strong dollar has led to stress, which is a double whammy.”

In addition to damage to foreign markets, a rising dollar also hurts the financial results of multinational corporations. Microsoft, Netflix and Johnson & Johnson, which typically make billions in overseas revenue, have already reported lost earnings.

Economists, businesses and families are growing pessimistically about the short-term economic outlook, as the US central bank battles to slow inflation. A measure of economic sentiment compiled by the European Commission has fallen for seven consecutive months, while a similar American sentiment scale Shows that consumer confidence has fallen below the 50% mark.

Despite these concerns, central banks have stuck to their commitment to reduce inflation.

At a press conference last week, US Federal Reserve Chairman Jerome Powell told reporters that an even more restrictive policy stance would be needed to restore price stability.

“Continuous periods of downward trend growth are likely to be required to contain inflation,” he said. “But restoring price stability is essential to set the stage for achieving maximum employment and stable prices in the long run.”

“We will continue this till we are confident that the work is done,” he said.