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India has ZERO probability of slipping into recession while USA has 40%, says study.

News by NRI Herald Australia, 27 July 2022

Amid a global pandemic, a war between two nations and a breakdown in the supply chain system resulting in sky-high inflation rates, most countries and their economies are in the doldrums. Industry experts have been fuelling aspersions that a global recession is just around the corner

Indian economy growing faster
Image Source: Bloomberg Study

Now, a Bloomberg survey has attempted to gauge the percentage probabilities of various countries slipping into recession. While the survey results may be cheerful for a country like India, it is not so much for Sri Lanka, the US or even the whole of Europe.

Contrary to Sri Lanka, its neighboring country of India has a zero probability of facing a severe economic slump, according to the economists involved in the research. Despite the Indian rupee touching a historical low against the US dollar, the Reserve Bank of India (RBI) has been able to keep the economy in good shape by increasing lending rates or repo rates by 90 basis points cumulatively in the various monetary meetings.

Surging energy prices have hit countries such as Germany and France the most, with a spillover effect impacting the rest of that region, said Steven Cochrane, chief Asia Pacific economist at Moody's Analytics Inc.

In general, Asia's risk of recession is around 20-25%, he said, adding that the odds of the US entering one is around 40%, while Europe stands at 50-55%.

What about US?

However, the US has not fared well in the survey as economists believe that there is a 40 percent chance of the country slipping into a recession by next year. It is pertinent to note that the inflation rate in the US increased by a whopping 8.6 percent in May 2022, reaching a forty-year high.

Nearly every US-based brokerage firm is of the same view that the US can easily slip into recession if course-corrective measures are not employed.

As for other countries, the survey shows that China, Taiwan, and Australia have a 20 percent chance of slipping into recession. Meanwhile, New Zealand has a 33 percent chance.

On a whole, Asia is still finely balanced with only a 20-25 percent probability of a recession. However, with the Russia Ukraine crisis affecting the entire landscape of Europe, the probability meter has crept up to 55 percent for the continent.

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