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The COVID-19 pandemic turned a global slowdown into a global downturn, and it’s just getting started…The World Bank…is now forecasting a synchronized downturn with 92.9% of economies on track to report recessions this year…surpassing the previous record of 83.8% set during the Great Recession.
Synchronization is when one or more indicators begin moving together. When this occurs, there’s an amplification of the event – good or bad.
- Good synchronizations tend to occur when economies are doing well, and the fortune spills over. This is usually due to increased trade, or foreign investment.
- Bad synchronization is the opposite – when things are so bad, the bad spills over. Once again, this spillover effect tends to shrink trade or reverse foreign investment.
A synchronized downturn is difficult to contain, since it requires multiple regions to coordinate. This is usually why synchronized downturns take much longer for the economy to recover from.
The World Bank expects the downturn to bottom next year, with recovery also starting next year but the recovery isn’t expected to bring the global economy back to pre-pandemic levels anytime soon.
Further fallout is expected to appear in waves, as the initial shock spreads into more negative developments and this is expected to cause a financial crisis in some regions, especially those with high levels of debt.
Editor’s Note: The original article by Daniel Wong (BetterDwelling.com) has been edited ([ ]) and abridged (…) above for the sake of clarity and brevity to ensure a fast and easy read. The author’s views and conclusions are unaltered and no personal comments have been included to maintain the integrity of the original article. Furthermore, the views, conclusions and any recommendations offered in this article are not to be construed as an endorsement of such by the editor. Also note that this complete paragraph must be included in any re-posting to avoid copyright infringement.
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