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They warn that several of the world's major economies will enter recession in the next 12 months


Experts fear that midsize economies, which had debt-fueled housing booms, will see a deeper-than-expected downturn.

Several of the world’s main economies will enter a recession in the next 12 months as central banks move to tighten monetary policy in a bid to combat rising inflation, according to Rob Subbaraman, chief economist at Japanese brokerage firm Nomura Holdings. Currently, central banks have adopted a “single mandate, which is to reduce inflation” Subbaraman said in statements to CNBC. “The credibility of monetary policy is too valuable an asset to lose. So they are going to be very aggressive “, he added. The economist recalled that since Nomura they have been warning about the risks of a recession, and now “many” of the developed economies “are already” in decline.

“Monetary policy too lax”

In addition to USA, the Japanese brokerage firm forecasts recessions starting in 2023 in the euro zone, the United Kingdom, Japan , South Korea, Australia and Canada. Subbaraman explains that the central banks of those countries maintained a “too loose monetary policy for a long time, hoping that inflation would be transitory.” “Now governments have to catch up and try to regain control over inflation,” he said.

Regarding the decrease in economic activity in the United States, Nomura expects that will be superficial, but it would last about 15 months from the last quarter of 2022. For their part, medium-sized economies such as Australia, Canada and South Korea, which have had debt-fueled housing booms, risk deeper-than-expected recessions if interest rate hikes trigger market crashes housing and deleveraging, he warned.


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