Cost-of-living crisis is becoming evident day by day, as it is only ‘getting worse’. The year 2022 and 2023 can be both a tougher years in the economic sector for the world. This warning has come from IMF chief Kristalina Georgieva.
The world is yet to face global recession in the next 12 years. Global economy has “darkened significantly” in the recent months due to war, this has been warned by the IMF. Previously, in 2008 world experienced the same ‘great depression’ which was the worst economic crisis of the 21st Century. Predatory lending targeting low-income homebuyers, excessive risk-taking by global financial institutions, and the bursting of the United States housing bubble culminated in a “perfect storm”. But this time, the cause of the economic crisis is due to the war between Ukraine and Russia. Karl Marx termed this financial crisis as the “theory of Crisis” because of the surplus production of but Capitalist do not gain enough profits, and hence proxy wars are necessary for boom of the economy.
The Commodity prices have skyrocketed due to the ongoing war in Ukraine. This has played catastrophic role in exacerbating the cost-of-living crisis for hundreds of million people. Inflation is also galloping with its higher rates. The US Federal Reserve could hike interest rates by 1% to tackle the inflation.
With supplies being hurdled by the Covid lockdowns in China is also crimping the world’s patchy pandemic recovery. Georgieva said the finance ministers and central banker who have gathered in Bali for G20 that, “face a global economic outlook that has darkened significantly”. She also warned by saying that, ” Think of how further disruption in the natural gas supply to Europe could plunge many economies into recession and trigger a global energy crisis.” Inflation in the eurozone for single currency is expected to fall from 7.6% to 4% next year. The European Central Banks in under pressure to raise interest rate to combat inflation. But Georgieva warned against raising rates to combat inflation was a threat to the world economy along with reducing debt and more global cooperation.
There will also be energy crisis in the EU countries in the coming winter, if Russia seizes the supple of natural gas. All this data forecasts a grave danger for the world economy. If steps are not taken immediately then 2008 scenario may repeat itself. As its often said, ‘history repeats itself first as tragedy and then as farce”. Marx referred this crisis as the “concentrated explosion” of all the contradictions of capitalistic production.
