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Deutsche depicts dark days to come with inflation predictions

  The world economy is going to face a turbulent time in the future - this is what the prediction coming from the fringe economists.
The most prominent voice among them comes from Deutsche Bank economists. With the recent policy changes, they predict a future with lingering inflation that will plague the world with a deep impact.
There have been several recent developments which is the reason behind this prediction from the leading bank. They place the blame on the Federal Reserve and their new framework for inflation management. Compared to the past, the new guidelines will opt to follow higher inflation for a complete recovery. However, the firm believes that this approach will have a negative impact in the long run.
In simple words, inflation is known as a constant rise of our daily livelihood. It may start from the basic goods and services like food, fuel sources, clothes and other commodities. Then it has a larger impact on the transportation cost, which affects every sector of our life.
At a regular interval, it has to happen with the changes in resource status and management. Nonetheless, it is foreseeable but a necessary evil. Proper management of inflation is a much-needed step for both global and national level economies, else a long-term negative impact can cripple a country or a continent.
One of the unintended side-effects of inflation can be the recession. Generally known as the degradation of economic activity in a region, we can call the economic decline a recession when it happens in two or more consecutive quarters.
One of the dire instances can be ‘Stagflation’ or recession-inflation, where the economic growth rate slows along with the high inflation rate.
With a low employment and trade rate, it is quite tough to get out of this pickle. This is what Deutsche dreads will happen across the globe with the poor economic management when the inflation finally arrives this time.
Even though it is a valid thought for concern, this sentiment is not unanimous on Wall Street. Here, most of the economists and the Fed, take inflation as a temporary problem. They plan to focus on stimulus while not putting too much importance on a larger impact.
However, Deutsche thinks that this approach will be a major mistake from 2023 and beyond. Their concern is resonated with eminent economist, Roger Bootle.
According to him, the poor monetary and fiscal policy will only instigate the danger of inflation along with the changes in demographics.
With the environmental changes and global political impact like the US-China relationship escalation, inflation can prove to be a major thorn on the side of uninterrupted economic growth.
Besides, the recent pandemic is already causing the development to stagger a bit. The impact in the countries on the lower-income, high-population spectrum, like the South Asian countries are facing the most of it, with the lockdown and economic slowdown.
At this time, a poor approach from the Feds regarding inflation management can have a grim global impact.
As they see this coming inflation as a transitory phase, they take a lacklustre approach to manage it. Hence, they do not want to increase the interest rates or cut back on the asset purchase, even though the indicators are above the inflation goal.
If the worst comes to pass, the Deutsche predictions may prove to be true to the fullest. It will be a misery to the global economy for a long time, which we can say for sure.



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