Slowing Global Growth and Rising Recession Risks: Causes, Consequences, and Policy Responses
DOI:
https://doi.org/10.69760/portuni.010319Keywords:
Global growth slowdown, recession risk, monetary policy, fiscal policy, inflation, supply shocksAbstract
Global economic growth has decelerated significantly in recent years, raising the risk of worldwide recession. This article examines the causes of the global growth slowdown – including pandemic aftershocks, supply chain disruptions, surging inflation, rising interest rates, energy price shocks, and labor market shifts – and analyzes the short-term and long-term consequences. Macroeconomic indicators show a post-pandemic rebound giving way to modest growth well below historical norms, with global GDP expected to expand by only around 2.5–3% in the mid-2020s. At the same time, many economies face the highest inflation in decades, prompting synchronous monetary tightening that risks triggering recessions. We discuss how these dynamics impact employment, investment, and debt sustainability, and we evaluate policy responses. Fiscal and monetary authorities worldwide confront a delicate balance between taming inflation and sustaining growth. In the short run, prudent interest rate policies and targeted fiscal support are needed to curb inflation and cushion vulnerable sectors. In the longer term, structural reforms are essential to reinvigorate productivity, diversify supply chains, and ensure energy and climate security. Enhanced global coordination is also vital to mitigate trade tensions and financial risks. Our findings underscore that without strategic policy action, the global economy may settle into a pattern of sluggish growth that undermines development goals. Conversely, decisive policy responses – from investment in productive capacity to international cooperation – can help reduce recession risks and put global growth on a more robust, sustainable path.
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