Due to the huge events that the world witnessed in this year, especially due to the Russia-Ukraine war, the global economy emerged in a chaotic situation from 2022 due to the increase in the prices of basic commodities like fuel and food. , a significant rise in inflation rates, and central banks’ resort to raising rates, reflected in a rise in interest lending rates and a fall in global stock markets.
Key points
In the face of this difficult environment, investors around the world do not hold much hope that economic conditions will improve in the new year of 2023. The chairman of the Federal US Reserve has warned that current indicators show that many risks are lurking in the global economy, especially the threat of a “black swan”. Former Alan Greenspan, when the embargo is triggered by a Chinese military attack on Taiwan, it will have catastrophic consequences for the entire world.
A black swan is a term for unpredictable events, such as the global financial crisis in 2008 or the war between Russia and Ukraine last year, that end in unexpected and severe consequences for stocks and other financial asset classes.
A researcher in economic and European affairs, in an interview with the “Sky News Arabia” website, said that the “black swan” scenario represented by China’s military attack on Taiwan may be a realistic and possible scenario, but it is very high with the prices on China and the rest of the world. The people of the world will pay the price, as this scenario, similar to the crisis of 1929-1930 that led to World War II, will plunge the world into a much bigger financial crisis.
the occurrence of a new war in the eyes of Asia, a very important region for the world economy, will greatly affect the world’s economies and is reflected in the collapse of stock exchanges and large companies, China is now facing an economic recession that affects its citizens and its productive power. Here, it may not be wise to engage in such a costly war in the first place.
Expressed concern over not controlling inflation
the world faces losses from the inability of countries or central banks, particularly the European Central Bank and the US Federal Reserve, to reduce very high inflation rates. The policies adopted by these banks to raise interest rates and increase gas prices are considered to be one of the most important mechanisms to reduce inflation, but if there is oil again, these mechanisms may become ineffective, thus raising concerns about the inability to control inflation.
Decline and Depression
forecasts say that 2023 will bring a decline in the Chinese, European and American economies, which are the most important and largest economic powers in the world, leading to a recession. In Asia and the world in general, tens of thousands or millions of people are affected. .
China
For his part, economist said in an interview with “Economy News” that the world faces many risks in 2023, especially the risk of collapse of economic activity in China due to the rapid spread of Covid-19 infection in the country, and the inefficiency of the health system. The wider waves of the epidemic need to be grasped, meaning obstacles to reopening the world’s second-largest economy and an inability to get production back on track.
Nuclear shock
the West’s continued support of Ukraine with qualitative weapons may prompt Russia to consider an existential war against it and use prohibited weapons that could upset the balance on earth. , pointing out that this step would cause a big shock to world markets and that prices would once again reflect negatively on the global economic situation, especially since it would require a strong Western reaction, the results of which no one knows. will be
Vaccine resistance mutation
the world will face serious dangers in 2023, with a new and deadly variant of Covid-19 capable of resisting vaccines, meaning the world will be shut down until the situation is under control. , which is reflected in volatility in supply chains and slowdown in economic activity
