Christian Sewing, Deutsche Bank AG’s Chief Executive Officer warned the global economy may be headed for a recession as central banks step up efforts to curb inflation, joining a growing chorus of executives and policy makers who are painting a pessimistic picture.
Speaking at the Future of Finance summit in Frankfurt, Christian Sewing said the global economy is buckling under multiple strains, from supply-chain issues in China to rising food prices, particularly in the poorest countries. While the bank had predicted for some time that interest rates would rise to curb price increases, the pace at which central banks are now expected to tighten surprised him, he said.
In an interview he said, “At least I would say we have 50% likelihood of a recession globally”. In the US and Europe, “the likelihood of a recession coming in the second half of 2023, while at the same time the interest rates go up, is obviously up versus the forecasts we had before the war broke out” in Ukraine.
His comments came on the same day that analysts at Citigroup Inc. made a similar prediction, citing supply shocks and higher interest rates. Sewing said despite the impact on economic growth, he supported the actions by central banks including the US Federal Reserve because they’re needed to bring down inflation, which he called a risk to democracy, to a more sustainable level.
Citigroup now sees the world economy growing 3% this year and 2.8% in 2023. Its economists said if a recession did occur it was likely to be a “garden variety” one in which unemployment rises several percentage points and output experiences a couple of weak quarters.
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