According to the managing director of the International Monetary Fund (IMF), Kristalina Georgieva, she cautions that:
“We are unable to rule out the possibility that a global recession may happen next year.”
This is because the outlook for the global economy had “darkened significantly” since April.
The outlook was given based on a more universal spread that includes :
- Inflation
- Substantial interest rate hikes
- Slowdown in China’s economic growth
- Escalating sanctions related to the war between Russia & Ukraine
“We are in very choppy waters, we cannot just rule out a global recession as the risks are increasing,” she said.
She also mentioned that “larger economies like China & Russia showed signs of contraction in the second quarters,” emphasising that the risk would be higher in 2023.
Given that there’s an urgent need to restore price stability, slower economic growth may be necessary.
“It’s going to be a tough 2022 and possibly a tougher 2023,” she said.
The IMF is expected to release an updated forecast for 2022 and 2023 by July as they’re still finalizing their new numbers.
This is what you can do to stay prepared:
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Keep your options open: The risk of losing a job is there and it’s always a good thing to keep your options open for opportunities, update your resume once in awhile and stay updated for any news.
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Create a financial plan: In general, it’s good to have a detailed budget of your day-to-day expenses. Keep track of your cash flow and find ways to “live smart.”
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Have an emergency fund prepared: It is advisable to have a fund that is enough to cover your living expenses for up to 6 months.
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Keep yourself in the loop: Keep yourself updated with the aiding programs the government offers, it may not be much but having it may help you stay afloat.
