KUCHING, April 27 : A major investment bank, Deutsche Bank, is forecasting a ‘major recession’ by late 2023.
In a report published on Tuesday, the bank regarded the recession as much ‘needed’ to bring down the soaring inflation.
According to the bank, the recession is due to three main factors, namely soaring inflation caused by the Russia-Ukraine conflict and lockdown in China, increased interest rates and a strong jobs market in the US.
It noted that it will take a “long time” to recover to the US Federal Reserve’s acceptable goal of a 2% inflation rate.
Consumer prices in the US spiked by 8.5% in March, the fastest pace in 40 years.
Deutsche Bank projected a target interest rate of 5% to 6 % to be sufficient in getting the inflation under control.
However, some major banks are more optimistic in their outlook such as Goldman Sachs with 35% chance of a recession over the next two years while Bloomberg Economics projected a 44% chance of recession happening before January 2024.
The good news, however, is that Deutsche Bank estimates the economy to rebound by mid-2024. – TVS
