October 6, 2022

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Warning lights flashing: The global economic downturn is approaching

Warning lights flashing: The global economic downturn is approaching

– Raj Subramaniam says, we are seeing a decline in all sectors around the world.

He is the CEO of shipping giant FedEx. The company is one of the largest in the world and operates all over the world. FedEx employs more than 250,000 people globally.

In a new report from the transportation giant, this year appears to be one of the wildest the company has ever had. But it doesn’t stop there. Now FedEx expects more contractions of epic proportions.

— These numbers don’t bode well, Subramaniam says of the company’s latest quarterly accounts, according to CNBC.com.

The risk of us entering a real recession

Bjørn Tangaa Sillemann, chief analyst at Danske Bank, also sees dark clouds on the horizon.

– There is no doubt that the economy is overheating now. There is nothing wrong with having a period of low or negative growth. This is how it should work perfectly, until we bring down inflation. But there is a risk of entering a real recession, as unemployment could rise sharply, says chief analyst for Extrabladet.

He notes that consumer confidence in Europe is now at its lowest, and many households are under pressure as a result of extreme energy prices, uncontrolled inflation, high interest rates, and weak purchasing power.

Together, that could push Europe and large parts of the world into a global crisis with massive unemployment, food shortages, debt and stagnation, which could turn into a long-term recession.

Widom: – All historical experiences indicate that this is a recipe for increasing unemployment

Also in Norway, which makes huge sums selling oil, electricity and gas during the ongoing energy crisis, warning lights are now flashing. Prime Minister Jonas Gahr Store and Finance Minister Trygiv Slagsvold Widom warn of tougher times.

We cannot do what was done in previous years, just to use more oil money to solve the challenges. On the contrary, we have to spend less and at the same time we have big expenses to pay and big tasks to do. If there is high price growth over time, all historical experience shows that it is also a recipe for increased unemployment, Widom warned during a press conference on August 31.

The worst possible scenario

Christine Lagarde, president of the European Central Bank, says the eurozone risks recession if Russia halts all gas shipments to Europe.

The possible worst-case scenario of 2023 points to negative growth if Russia cuts off all gas supplies and energy rationing in the eurozone, warns Lagrid.

DNB Markets warns of the impact of rapid increases in interest rates on Norwegian households.

Sharp and frequent increases in interest rates, which are intended to cool the economy and thus delay the duration of unusually high rates, would be a real cold shower for households. After all, Norwegian households are heavily indebted and have variable interest rates almost exclusively on their loans, DNB Markets wrote in its report.