Over the past few months, the balance of risks to the global economy has shifted towards a more severe course of events.

This was announced on Tuesday, November 8, by the chairman of the Central Bank of Russia, Elvira Nabiullina.

According to her, the base forecast of the regulator is still the most likely and does not imply new major shocks in the world.

Nevertheless, the Central Bank experts do not rule out the possibility of a global crisis.

In such a scenario, attempts by the leading central banks to curb inflation by raising rates will not lead to the desired result, consumer prices will continue to rise everywhere.

At the same time, tight monetary policy will hold back global economic growth.

At the same time, it will become more expensive to service debts, the value of assets will begin to decline, and financial stability will be threatened.

“Geopolitical tensions will grow according to this scenario, fragmentation and regionalization of the global economy will occur.

Sanctions against Russia will increase, we are considering this scenario with increased sanctions, and this will become another factor in the deterioration of the situation in the global economy, in turn.

As a result, in our opinion, in this scenario we can see a crisis comparable in scale to 2008-2009,” Nabiullina said.

Earlier, a similar forecast was made by the specialists of the UN Conference on Trade and Development (UNCTAD).

As the organization recalled, over the past ten years, the central banks of developed countries have kept interest rates “at an ultra-low level”, but have not achieved a qualitative growth of their economies.

Now regulators have to tighten monetary policy in order to contain prices, but this is fraught with serious consequences, experts from an international organization say.

“Changes in the monetary and fiscal policies of advanced economies could push the world into a global recession and prolonged stagnation, more damaging than the financial crisis of 2008 and COVID-19 in 2020,” UNCTAD said in a study.

Price solutions

It should be noted that back in 2021, global inflation accelerated from 3.2 to 4.7%, and in 2022 the figure could reach 8.8%, the highest level in the last 26 years.

Such calculations were made by economists of the International Monetary Fund.

Initially, the prices of goods and services began to skyrocket in most countries of the world against the backdrop of the coronavirus pandemic.

Quarantine restrictions led to interruptions in the supply of components, components, raw materials and materials, which ultimately resulted in a rise in the cost of a number of goods.

At the same time, the authorities of many states began to actively print money and pump their own economies with it to stimulate their growth, which further accelerated inflation.

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In 2022, the situation was aggravated by large-scale Western sanctions against Russia, analysts admit.

Thus, after the start of the special operation of the Russian Federation in Ukraine, the US, the EU, the UK, as well as a number of other states introduced broad sectoral economic restrictions against Moscow.

The number of restrictions adopted since February 22 has already exceeded 10 thousand, according to the materials of the global sanctions tracking database Castellum.AI.

“First of all, sanctions against the Russian Federation have limited the supply of oil and gas in the world.

This led to a global increase in energy prices and a more serious acceleration of inflation in developed countries.

In response, local central banks began to raise rates, which is holding back economic growth, and now these states are teetering on the brink of a soft drawdown and recession, ”said Alexander Abramov, head of the laboratory for analyzing institutions and financial markets at the RANEPA Institute of Applied Economic Research, to RT.

According to him, the reverse effect of the sanctions was most noticeable in European countries, most of which do not have their own oil and gas production.

And as the supply of Russian hydrocarbons declines, the EU states become dependent on imports of more expensive energy sources from the United States.

A similar point of view in an interview with RT was also expressed by Georgy Ostapkovich, director of the Center for Market Research at the Institute for Statistical Research and the Economics of Knowledge at the Higher School of Economics.

“Sanctions affect everyone.

Of course, they affect us, but they do not pass without a trace for those who impose them.

Restrictions on the supply of energy raw materials are very painful for European countries.

Most likely, this winter, part of the energy-intensive EU enterprises will either seriously reduce production volumes or stop altogether, ”he suggested.

“Prospects remain pessimistic”

The rush price increase has already become one of the main reasons for the significant drop in business activity in the world.

Analysts of the international investment bank JP Morgan came to this conclusion.

According to the company, in October, the global PMI index in manufacturing and services fell to 49 points.

The last time a similar value could be observed was back in mid-2020, when the global economy was experiencing the consequences of the COVID-19 pandemic.

For the past three months, the indicator has been continuously below the critical level of 50 points.

This state of affairs traditionally indicates a worsening economic situation.

“October PMI studies point to a further downturn in global economic activity with declining productivity in both the manufacturing and services sectors... Due to low demand, strong geopolitical and market unpredictability, and still high inflationary pressures, the growth outlook for the rest of the year remain pessimistic,” said JP Morgan global economist Bennett Parrish.

Against the backdrop of rising inflation, Western countries will be forced to continue raising rates, Alexander Abramov is sure.

This, in his opinion, may negatively affect the stability of financial institutions such as banks, insurance companies and pension funds.

“The fact is that the increase in the rate entails a decrease in the value of the volume of bonds in the portfolios of companies and a misalignment between assets and liabilities.

As a result, the situation is fraught with the emergence of crises in these industries,” the expert explained.

In addition, according to Georgy Ostapkovich, due to the increase in rates, loans for businesses and citizens will become less accessible.

In this case, companies will begin to reduce investments in their projects, production volumes will further decrease along with the incomes of the population.

At the same time, further strengthening of sanctions pressure on Moscow risks only complicating the current state of affairs in the West.

“In principle, the main package of sanctions has been practically exhausted by now.

The most serious thing that can happen is the complete cessation of trade ties with Russia, but in this case, everyone will suffer again, ”the specialist emphasized.

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Accelerated adaptation

According to Elvira Nabiullina, for Russia, the onset of the global crisis will mean a drop in demand for export products, a more serious reduction in GDP, as well as another round of rising inflation and the weakening of the ruble.

At the same time, as the head of the Central Bank emphasized, such a development of events remains unlikely so far.

“But this is not a reason for us to simply wait for events to develop, as they say, wait for the weather by the sea.

On the contrary, we must, as soon as we can, create the conditions for an accelerated restructuring of the economy.

Only this can be an adequate response to the worsening global external conditions.

Here, of course, a wide range of measures is needed,” Nabiullina noted.

In particular, the Chairman of the Central Bank announced the need for reforms to improve the business climate, and also called for intensifying state support measures for strategically important industries and small businesses.

In addition, according to Alexander Abramov, in order to restructure the economy, it is necessary to reorient demand for domestic production.

This can be done with the help of a full-fledged launch of import substitution, the expert is sure.

“In this regard, it is really necessary to support private Russian manufacturers more.

But even now the state is trying to help: it is increasing spending on infrastructure, that is, the state is becoming an investor for important facilities.

This supports economic demand and employment,” Abramov concluded.